Question 1

Respond - true or false - to the following statements:

a) For companies that have minority shareholding the significance of corporate

governance is to enhance the level of managerial accountability

b) Corporate governance does not play any significant role in companies that have
majority shareholding.

c) King IV report places great emphasis on the role of non-executive directors,

shareholders, auditors and others holding management to account for its actions
because of the need to improve managerial accountability.

d) One of the “self-regulatory” measures to enforce corporate governance in

companies is disclosures.

e) The remuneration of directors of listed companies is a private and personal

matter. Directors are thus not obliged to disclose these details.

Question 2
The ultimate responsibility for maintaining an appropriate balance between
management and the owners rests with:

a. Board of directors.
b. Managers.
c. Shareholders.
d. Regulating entities

Question 3
The internal audit function is least effective when the department:
a. Is non-independent.
b. Is competent.
c. Is objective.
d. Exhibits integrity.

Question 4
Most of the organisations are producing value-based codes and building values into
their corporate strategies, for all of the following reasons EXCEPT which ONE?

a. Corporate values are important for giving guidance to staff about what the
expectations an employer has of them with regard to their behaviour.
b. Corporate values are made mandatory under the statutory laws, and failure to
comply amounts to legal breach.
c. Corporate values seek to ensure a consistency of conduct across the entire
organisation.
d. Corporate values directly relate to organisation’s risk management strategies and
supports reputation and credibility.
Question 5
‘How much recycling of waste and paper undertaken by an organisation’ relates to
which one of the following?

a. Corporate governance of an organisation

b. Corporate values of an organisation
c. Social responsibility of an organisation
d. Corporate policy towards sustainability

Question 6

Directors may not be disqualified for:

a. paying inadequate attention to the company finances
 b. continuing to trade when the company is insolvent
c. being convicted of drunken driving
d. persistent breaches of company legislation
e. being an un-rehabilitated insolvent

Question 7
Which of the following is not true about Audit Committees’ functions?
a. To remove all fraudulent individuals from the company.
b. Nominating the external auditor for appointment.
c. Approving the terms of engagement and remuneration for the external audit
engagement.
d. Monitoring and reporting on the independence of the external auditor.
e. Reviewing the quality and effectiveness of the external audit process.

Question 8
Every company must maintain the following except one. Which one is the odd one out?
a. Copy of the MOI.
b. Copy of any rules made by directors.
c. Securities register for every profit company.
d. Copies of accounting records for the past four years.
e. Notice and minutes of all shareholder meetings.

Question 9
Which of the following is true about effects of compulsory winding-up?

a. All civil proceedings against or by the company are not suspended until a liquidator
is appointed.

b. Claims of directors are not stayed or suspended.

c. All property is placed under the control of the Master until the liquidator is
appointed.

d. Any transfer of shares is valid until the winding – up is concluded.

e. Assets cannot be applied in payment of the costs of the winding – up.

Question 10
The following persons are disqualified from being nominated as a liquidator except
one. Which one is it?

a. A body corporate.

b. A visually impaired person.

c. A minor

d. Any agent with a general power of attorney to vote on behalf of a member or a

creditor.

e. Any person removed from an office of trust.

Question 11
Which of the following is false about King IV principles?

a. Directors should be appointed through a formal process.

b. Shareholders should not approve the company’s remuneration policy.

c. Companies should remunerate directors and executives fairly and responsibly.

d. The audit committee should be chaired by an independent non-executive

director.

e. The audit committee should oversee integrated reporting.

Question 12
Which of the following is not true about the King IV principles?
 a. The audit committee should not be an integral component of the risk
management process.

b. The Board should be responsible for the governance of risk.

c. The Board should ensure continual risk monitoring by management.

d. The Board should determine the levels of risk tolerance.

e. The Board should be responsible for information technology governance.

Question 13
Which of the following is false about the JSE Listings Requirements?

a. There must be a policy detailing the procedures for appointments to the Board.

b. The CEO must also hold the position of the Chairperson.

c. An audit and a remuneration committee must be appointed.

d. The audit committee must set the principles for recommending the use of
external auditors for non-audit purposes.

e. The statement addressing the extent to which the company complies with the
King III must be disclosed in the company’s annual report.

Question 14
To achieve good corporate citizenship, the board should practice the following except
one. Which one is it?

a. Protect, enhance and invest in the well-being of the company, society and the
environment.

b. Ensure that the company’s performance and interaction with its stakeholders is
guided by the Constitution and the Bill of Rights.

c. Ensure that immeasurable corporate citizenship programmes are

implemented.
 d. Ensure that management develops corporate citizenship policies.

e. Ensure that the company is and is seen to be a responsible corporate citizen

as recommended by King IV.

Question 15
The ultimate responsibility for maintaining an appropriate balance between
management and the owners rests with:
a. Board of directors.
b. Managers.
c. Shareholders.
d. Regulating entities

Question 16
The following are generally accepted principles with which the board must comply except
one. Which one is it?

a. A smaller number of board members will be more effective and create more
value.

b. Effective boards are packed with big-name people.

c. Boards must be independent and members should be adequately

compensated to create value.

d. Boards must include younger, more active people with time to spend in
understanding the company and its industry.

e. Effective boards must be truly independent.

Question 17
There are various ways that ethics can be institutionalised in the organisation. Which one
of the following is not one of the ways?

a. Encourage ethical treatment of all internal stakeholders.

b. Encourage a business culture in which trust is valued.

 c. Encourage a zero tolerance approach to corporate misconduct and unethical
conduct such as fraud, corruption, theft and dishonesty.

d. Discourage the organisation to play a role as an agent for corporate governance.

e. Encourage a culture of ethics by establishing a Code of Ethics and Code of

Conduct which expresses and reflects the organisation’s ethical standards.

Question 18
Suppliers and customers reward good corporate performance by:

a. Actively and favorably doing business with the company.

b. Investing in the company at the lower desired rate of return of investment.

c. Disinvesting or demanding a higher rate of return on their investment.

d. Giving extra benefits to the management of the company.

Question 19
Shareholders own corporations and the ______________ is elected to make business
decisions on behalf of shareholders.
a. Chief executive officer.
b. Board of directors.
c. Chief compliance officer.
d. Legal counsel.

Question 20
Effective corporate governance does all of the following except:

a. Ensure corporate accountability.

b. Enhance the integrity and efficiency of the capital market.

c. Eliminate the prospect of fraud within an organization.

d. Enhance the reliability and quality of public financial information..

Question 21

An advantage of a corporation is:

a. Limited liability for the owners.
b. Unlimited life of the corporation.
c. Ease of transferability of ownership interests.
d. All are advantages of a corporation.

Question 22
King III recommends that the Board should do the following except one. Which one is it?

a. Appreciate that strategy, risk, performance and sustainability are inseparable.

b. Be responsible for the governance of risk.

c. Ensure that there is an effective risk-based internal audit.

d. Be evaluated monthly along with its committees and the individual directors.

e. Act in the best interests of the company.

Question 23
Recommendations made by King IV regarding the CEO include the following except
one. Which one is it?

a. The role of the CEO and functions do not need to be formalized.

b. The board should evaluate the CEO’s performance.

c. The board should ensure that there is a succession plan in place for the position
of CEO.

d. The CEO should not be a member of the remuneration, audit or nomination

committees but should attend their meetings by invitation.

e. The function of the Chief Executive Officer must be separate from that of
Chairperson.