Learning Objective 11-6
1) Which of the following is an indication of good corporate governance?
A) A company has a board of directors with highly qualified members who are independent of the management team.
B) A company has an audit committee that reports directly to the company's CFO.
C) A company has a board of directors that delegates all major financial decisions to management.
D) The company has the external auditors prepare, as well as audit, its financial statements.
2) An important factor in good corporate governance is ________.
A) an ethical climate set by top management
B) an audit committee that reports directly to the company's CFO
C) a board of directors that delegates all major financial decisions to management
D) a board of directors whose members all have financial backgrounds
3) Which of the following is an indication of good corporate governance?
A) A company has a board of directors made up entirely of the company's top managers, who have the most comprehensive knowledge of the company's business.
B) A company has a set of financial statements that is simple and easy to understand.
C) A company has an information processing system that was designed by its external auditors.
D) A company has an audit committee that reports directly to the company's CFO.
4) Which of the following is an indication of good corporate governance?
A) A company has a board of directors made up entirely of the company's top managers, who have the most comprehensive knowledge of the company's business.
B) A company's annual report includes 170 pages of notes written by a Harvard PhD.
C) A company's external auditors are independent enough to stand up to the company's executives on any given accounting issue.
D) The company has the external auditors prepare, as well as audit, its financial statements.
5) An indication of good corporate governance ________.
A) is a board of directors with highly qualified directors who are independent of the management team
B) is a set of financial statements that are transparent
C) is the hiring of independent external auditors who will stand up to the executives on any given accounting issue
D) all of these
6) Corporate governance describes how a firm governs itself and is executed by the board of directors.
7) Good corporate governance requires the financial statements to be prepared by independent external auditors.
8) A good place to find out about a company's corporate governance is the company's Web site.
9) Name two characteristics of good corporate governance.