Chapter 3 1 the sarbanes oxley act 2 tone from the

Chapter 3
1 The Sarbanes-Oxley Act
2 Tone from the top, how the board works as a team, key actions of the board and its
committees, board effectiveness, communication with shareholders.
3 C, E
4 Minority, foreign
5 IFAC
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Chapter 4
1 Two-tier; unitary. Twe-tier has a supervisory and management board; unitary has non-
executive direstors on the single board.
2 Nomination committee, audit committee, remuneration committee.
3 Leadership, effectiveness, accountability, remuneration, relations with shareholders
4 True
5 False
Chapter 5
1 B, E
2 True and fair (or fairly present)
3 Qualified, adverse and disclaimer
4
Internal audit External audit
Reports to shareholders X
Appointed by management X
Power from statute X
Covers all categories of risk and investigation X
5 C, E
Chapter 6
1 Financial statement fraud; misapporpriation of assets
2 Motive/incentive, opportunity, attitude/dishonesty
3 Prevention, detection, response
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4
Error of
omission
Error of
commission
Error of
principal
Trial
balance out
of balance
An invoice from a
customer gets lost in the
post
X
An invoice from a
customer for $541 is
entered into the
bookkeeping system as
$451
X
Repairs of $1,200 are
debited to the cost of
non-current assets instead
of the repairs account
X
A purchase of $240 is
entered as:
• Dr Purchases 240
• Dr VAT 40
• CR Supplier $240
X X
5
๏
Segregation of duties
๏
Physical
๏
Authorisation and approval
๏
Management and supervision
๏
Organisation
๏
Arithmetic and accounting
๏
Personnel
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Chapter 7
1 False. There might be no legal responsibility but the behaviour of suppliers can taint
companys buying from them and buyers can therefore bring pressure to bear on their
suppliers to behave better,
2 Profit, people, planet or profit, social, environmental.
3 GRI is an international independent organisation that helps businesses, governments
and other organisations understand and communicate the impact of business on
critical sustainability issues such as climate change, human rights, corruption and many
others.
4 False. CSR means going further than the law prescribes.
5 False. Directors’ legal duty is to maximise shareholder wealth.
Chapter 8
1 Offer, acceptance, consideration, intention to create legal relations. (You could also
mention ‘capacity’)
2 A, C
3 B
4 A – Probably a misrepresentation because the statement is one of fact and is untrue.
B– Because the statement was an opinion of the seller it is probably not a
misrepresentation provided it was honestly held.