SBL Governance and sustainability

ACCA · Strategic Professional · 8 questions

Name: ____________________ Date: ____________

Which theory suggests that managers, as agents, may pursue their own interests rather than those of the owners?
- A Stakeholder theory
- B Agency theory
- C Contingency theory
- D Stewardship theory
Under a principles based approach to corporate governance, a company that does not follow a provision is usually expected to:
- A Explain the reason for departing from it
- B Appoint a new auditor
- C Stop trading until it complies
- D Pay a fine
Which committee is mainly responsible for reviewing the integrity of financial statements and the external audit process?
- A Risk management executive
- B Nominations committee
- C Audit committee
- D Remuneration committee
The role of the remuneration committee is mainly to:
- A Approve the budget
- B Appoint the external auditor
- C Set the pay policy for executive directors, linked to long-term performance
- D Select the new directors
Combining the roles of chair and chief executive in one person is criticised mainly because it:
- A Increases the cost of the board
- B Prevents the use of committees
- C Concentrates power and reduces independent challenge
- D Is illegal in all countries
A mapping of stakeholders by power and interest classifies a group with high power and low interest as one to:
- A Monitor with minimal effort
- B Manage closely
- C Keep satisfied
- D Keep informed
Sustainability reporting that follows the idea of the triple bottom line reports performance on:
- A Economic, social and environmental measures
- B Profit, loss and cash
- C Costs, revenue and tax
- D Assets, liabilities and equity
A company claims that its products are environmentally friendly but has no evidence to support the claim. This is an example of:
- A Materiality assessment
- B Greenwashing
- C Integrated reporting
- D Stewardship

Answer key

1. B, 2. A, 3. C, 4. C, 5. C, 6. C, 7. A, 8. B

Agency theory deals with the conflict between owners (principals) and managers (agents).
Principles based codes work on comply or explain, unlike rules based regimes that impose penalties for breach.
The audit committee oversees financial reporting, internal control and the relationship with the auditor.
Remuneration committees set executive pay to align it with company strategy and shareholders' long-term interests.
Separation of the roles is a feature of good governance because it limits the dominance of one individual.
In Mendelow's matrix, high power and low interest means keep satisfied. High power and high interest means key players to manage closely.
The triple bottom line considers people, planet and profit, not financial results alone.
Greenwashing is the making of unsupported or misleading claims about environmental performance.