ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,

RISK MANAGEMENT AND INTERNAL CONTROL

Teachers’ Guide Module #09

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Materials:
LEARNING OBJECTIVE: Student Activity Sheet;
This assessment measures the competence of the student in terms pencil with eraser and ball pen
of his/her application of knowledge and skills in the following topics:
1. Introduction to Corporate Governance
2. Corporate Governance Responsibilities and Accountabilities
3. SEC Code of Corporate Governance
4. Introduction to Ethics
5. Business Ethics
ACC 112 - CORPORATE GOVERNANCE, BUSINESS ETHICS, RISK MANAGEMENT AND INTERNAL CONTROL
FIRST PERIODIC EXAMINATION

GENERAL DIRECTIONS
READ THIS PAGE BEFORE STARTING THE ASSESSMENT

This test is composed of two (3) sections and has a total score of sixty fifty (60) points. You have one (1)
hour to finish this examination. The composition is as follows:

(1) Multiple-choice question Section. The questions in this section is with four answer choices. The test
is composed of thirty (30) questions and is rated as one (1) point each.
(2) Enumeration Section. The test is composed of three (2) problems with several
sub-problems/requirements. Please see rating per problem/requirement.
(3) Essay Section. The test is composed of two (2) problems with several sub-problems/requirements.
Please see rating per problem/requirement.
 All things unnecessary for the test must be put in front of the testing area. Use BLACK or BLUE ink
ballpen only. Write all your answers on the designated space. Further, erasures are strictly NOT
allowed and will invalidate your answers.
 You may NOT use smart phones or reference materials during the testing session. Only the allowed
calculators should be used.
 Try to answer all questions. In general, if you have some knowledge about a question, it is better to
try to answer it. You will not be penalized for guessing.
 Be sure to allocate your time carefully so you can complete the entire test within the exam session.
You may go back and review your answers at any time during the exam session.
 Those who are caught cheating or doing acts not allowed during the exam shall be instructed to
surrender their test papers and shall leave the testing room immediately. Subsequently, their
papers shall be rated as ZERO.

This document is the property of PHINMA EDUCATION

 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Teachers’ Guide Module #09

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

This concludes the instruction page.

You may now begin answering.
MULTIPLE CHOICE

________1. The corporate governance structure of a company reflects the individual companies.
a. Cultural and economic system.
b. Social and regulatory system.
c. Legal and business system.
d. All of the above.

________2. The internal audit function is least effective when department:

a. Is objective.
b. Is non-independent.
c. Exhibits integrity.
d. Is objective
________3. An organization’s appropriate tone at the top promoting ethical conduct is an example of:
a. Ethics sensitivity.
b. Ethics Incentives.
c. Ethical behavior.
d. Business Ethics.

________4. The ultimate reason or purpose for why we make decisions in business firm is based on:
a. Values
b. Legal Ethics
c. Profit Motive
d. Golden Rule

________5. How do law and business ethics relate to each other?

a. Ethics is unrelated to the law because ethics answers only moral questions.
b. The law established what is ethical, as anything which is automatically ethical.
c. Law and business ethics serve as an interactive system, informing and assessing each other.
d. Ethics entirely determines what the law will be, as ethics is focused on finding one right answer to every question.

________6. Corporate governance is a form of ____________?

a. External regulations.
b. Government control.
c. Self-regulation.
d. Charitable action.

________7. Who are organizational stakeholders?

a. Customers.

This document is the property of PHINMA EDUCATION

 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Teachers’ Guide Module #09

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

b. Government.
c. Employees.
d. All of the above.

________8. Which of the following are would most effectively act as primary objective of a business
organization?
a. To make Profit.
b. To procure resources.
c. To communicate with shareholders.
d. All of the above.

________9. Sets out the purpose and general direction for the organization? .
a. Mission statement
b. Vision Statement
c. Profit Statement
d. None of the above

________10. What is Ethics to do with?

a. Business.
b. wider community.
c. Nothing.
d. Right and wrong.

________11. A combination of face-to-face classes and home-based learning.

a. Traditional Learning set-up
b. Flexible learning Set-up
c. Mixed Learning Set-up
d. Modern Learning Set-up.

________12. What is meant by separation of ownership and control?

a. That those who control the company should be separate to those who own it
b. That the law should seek to keep the owners and controllers of company apart in order to avoid an
over-concentration of power High pay will render the board less competent.
c. That the owners of companies have become separated from those who control companies.
d. That owners and controllers of companies should not act in concert to defeat resolutions.

________13. What is the main purpose of corporate governance?

a. To ensure that regulatory frameworks are adhered to
b. To separate ownership and management control of organisations
c. To separate ownership and management control of organisations and the requirement for
increased accountability to stakeholder groups.

This document is the property of PHINMA EDUCATION

 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Teachers’ Guide Module #09

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

d. To maximize shareholder value.

________14. Which of the following is the study and practice of decisions about what is good, or right?
a. Consequences
b. Morals
c. Law
d. Ethics

________15. Directors’ responsibilities are unlikely to include

a. a fiduciary duty
b. a duty to keep proper accounting records
c. a duty to propose high dividends for shareholders
d. a duty of care

________16. To be successful, business ethics training programs need to:

a. focus on personal opinions of employees
b. be limited to upper executives
c. promote the use of emotions in making tough ethical decisions
d. educate employees on formal ethical frameworks and model of ethical decision making

_______17. Who is responsible for ensuring the accuracy, timeliness of public reporting of financial and
other information for public companies?
a. Securities and Exchange Commission
b. Board of Accountancy
c. External Auditors
d. Shareholders

_______18. Providing oversight of the internal and external audit function and the process of preparing
annual financial statements as well as public reports on internal control are responsibility of:
a. Internal Auditors
b. Audit Committee of BOD
c. External Auditors
d. Management

_______19. Which of the following is not functions of External auditors?

a. Audit of public company financial statements
b. Other services such as tax or consulting
c. Reporting results and analyses to management and audit committees
d. Audit of nonpublic company financial statements

This document is the property of PHINMA EDUCATION

 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Teachers’ Guide Module #09

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

_______20. Understanding that his role is not to act as auditor or to act as member of the management is
among the specific activities of:
a. Non-executive directors
b. Executive Directors
c. Stockholders
d. Board of Directors

_______21. Ensures that all its members feel that they have stake in it and do not feel excluded from the
mainstream of society.
a. Rule of Law
b. Equity and Responsiveness
c. Participation
d. Rule of fairness

_______22. Transparency and full disclosure advocate the following except

a. Sound disclosure policies and practices
b. Meeting the information needs of investment communities
c. Solid foundations for management oversight.
d. None of the above.

_______23. The characteristic of good governance where fair legal framework are enforces impartially is
a. Rule of Law
b. Accountability
c. Equity
d. Participation

________24. The following are duties and responsibilities of Corporate Secretary except
a. Advises establishment of board committees and their terms of reference.
b. Safekeep and preserves the integrity of the minutes of meetings of the board and its committee
c. Assures availability of proper orientation for the first-time directors.
d. Attends all board meetings, except when justifiable causes.

_______25. Professional competence is a principle of

a. Ethics
b. Professional Ethics
c. Personal Ethics
d. Business Ethics

This document is the property of PHINMA EDUCATION

 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Teachers’ Guide Module #09

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

_______26. the system of stewardship and control to guide organizations in fulfilling their long-term
economic moral, legal and social obligations towards stakeholders.
a. Governance
b. Good governance
c. Corporate Governance
d. Good government

________27. group of executives given the authority by the BOD to implement the policies it has laid down in
the conduct of business of the corp.
a. Director
b. Management
c. auditor
d. regulatory board

________28. any individual, organization or society who can either affect or be effected by company’s
strategies, policies, business decisions.
a. shareholders
b. investors
c. stakeholders
d. community

________29. Which of the following encourage employee participation?

a. training and development
b. reward/compensation policies
c. health, safety and welfare
d. all of the above

_______30. Providing oversight over management activities in managing credit, market, liquidity,
operational, legal and other risk exposures of the corporation is the responsibility of:
a. Corporate Governance Committee
b. Board Risk Oversight Committee
c. Audit Committee
d. Related Party Transaction Committee

Part II. Enumeration (20 pts)

1. Enumerate the 16 Principle of SEC Code of Corporate Governance? (4 pts)

This document is the property of PHINMA EDUCATION

 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Teachers’ Guide Module #09

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Answer:
1. Establishing a competent board.
2. Establishing Clear Roles and Responsibilities of the Board.
3. Establishing Board Committees
4. Fostering Commitment
5. Reinforcing Board Independence
6. Assessing Board Performance
7. Strengthening Board Ethics
8. Enhancing Company Disclosure Policies and Procedures
9. Strengthening the External Auditor’s Independence and Improving Audit Quality
10. Increasing Focus on Non-Financial and Sustainability
11. Promoting Comprehensive and Cost-Efficient access to relevant information
12. Strengthening the Internal Control System and Enterprise Risk Management Framework
13. Promoting Shareholder Rights
14. Respecting Rights of Stakeholders and effective redress for Violation of Stakeholder’s Rights
15. Encouraging Employee participation
16. Encouraging Sustainability and Social Responsibility

2. List down the objectives of corporate governance.

Answer:

The objectives of corporate governance are

1. To build an environment of trust and confidence among those who have competing and
conflicting interest.
2. To enhancing the shareholders’ value and protect the interest of other stakeholders.
3. To have system and procedure.

Part III. Essay (10 points each)

1. Explain the concept of comply and explain approach.

Suggested Answer:
 Comply or Complain approach combines the voluntary compliance with mandatory disclosure.
Companies do have to comply with the code, but they must state in their annual corporate governance
reports whether they comply with the Code Provisions, identify any areas of non-compliance, and
explain the reasons for non-compliance

2. Briefly discuss the economic impact of failure to observe business ethics.

This document is the property of PHINMA EDUCATION

 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Teachers’ Guide Module #09

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Suggested Answers:

 Failure to observe laws and regulations by companies and employees may lead to legal charges.
 Negative effect to employee’s performance.
 Employer-employee relationship can be affected, lack of respect.
 Damage to company credibility

-NOTHING FOLLOWS-

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