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ACCA Applied Knowledge · Financial Accounting · Duties and responsibilities of those charged with governance

A company chairman is also the chief executive officer and holds both roles with no one to challenge him. Which governance concern does this most directly raise?

The main concern is the concentration of power in one individual with no balance of authority. Governance codes recommend separating the roles of chairman, who leads the board, and chief executive, who runs the business, so there is oversight and challenge. The other options are accounting matters, not board structure issues.

  1. AConcentration of power in one individual without a balance of authorityCorrect
  2. BFailure to apply the going concern concept
  3. COverstatement of non-current assets
  4. DInadequate depreciation policies

Explanation

Governance codes recommend separating the chairman and CEO roles so that no one person has unchecked decision-making power. The other options are accounting issues unrelated to the board structure described.

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