Notesale: Turn your study into money

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HULT International Business School
ACC440 - Corporate Governance (Prof
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Willcox)
Prepped Answers for the Questions of the Final Exam

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In short, it is a method of governing the company like a
sovereign state, instating its own customs, policies and laws to its employees from the highest to the lowest levels
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Failed energy giant Enron, and its bankrupt employees and shareholders, is a prime argument for
the importance of solid corporate governance
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A company can also
hold meetings with internal members, such as shareholders and debtholders - as well as suppliers, customers and
community leaders, to address the request and needs of the affected parties
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Corporate governance essentially involves balancing the interests of a company's many stakeholders, such as
shareholders, management, customers, suppliers, financiers, government and the community
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Salomon Ltd)

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​Corporate Power refers to the power and authority of a Business Entity (not just a
corporation), under the terms of its Governing Documentation and applicable Law, to enter into, and become bound
by, the terms of any particular transaction
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What was the response of the UK Bullock Committee Report (1977)?
The report of the committee of inquiry on industrial democracy (1977) and the research papers (1976) reflected the
first serious corporate governance study in Britain
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It proposed
a continuation of the unitary board, but with workers representative directors (Trade Unions)
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What did the Corporate Report (1975) from the UK Accounting Standards Committee
propose?
It proposed that all economic entities report publicly and accept accountability to all those whose interest were affected
by the directors decision
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“A corporate entity must report publicly and must be accountable of their actions” (this rule was not implemented
because it was seen as eroding managerial power, so recommendations were made to report more to stakeholders
that are primarily affected by decisions
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503 part
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Name some corporate collapses in the 1980s that led to the first studies of CG?
Book: Tricker 503 p
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S
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Section 302 requires the CEO and CFO of every U
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publicly traded company to certify in its 10-Q and 10-K filings
the “appropriateness of the financial statements and disclosures contained in the periodic report, and that those
financial statements and disclosures fairly present, in all material respects, the operations and financial condition of the
issuer
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Section 404 directs that management and auditors work in tandem to report and assess the company’s system of
ICFR
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Section 404(a) requires management to report on the effectiveness of ICFR, while Section 404(b)
requires an auditor attestation with respect to an issuer‘s ICFR
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Furthermore, the Jumpstart our Business Startups Act (JOBS
Act) was signed into law in 2012
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Sarbanes Oxley Act Summary of Major Sections:
SOX Section 302 -​ Corporate Responsibility for Financial Reports
a) CEO and CFO must review all financial reports
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c) Information in the financial report is "fairly presented"
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e) CEO and CFO must report any deficiencies in internal accounting controls, or any fraud involving the
management of the audit committee
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SOX Section 401​: Disclosures in Periodic Reports
All financial statements and their requirement to be accurate and presented in a manner that does not contain
incorrect statements or admit to state material information
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SOX Section 404​: Management Assessment of Internal Controls
All annual financial reports must include an Internal Control Report stating that management is responsible for an
"adequate" internal control structure, and an assessment by management of the effectiveness of the control structure
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In addition, registered external auditors must attest to the
accuracy of the company management’s assertion that internal accounting controls are in place, operational and
effective
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SOX Section 806​ - Protection for Employees of Publicly Traded Companies Who Provide Evidence of Fraud
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SOX Section 906​ - Corporate Respo

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