ACCA Applied Knowledge · Business and Technology · Governance in business organisations
In a listed company, which of the following is the main role of non-executive directors on the board?
The main role of non-executive directors is to give independent challenge and scrutiny to the executive directors' proposals and performance. They are not involved in day-to-day management, and they do not prepare the accounts or act as auditors.
- AManaging the daily operations of the company's departments
- BProviding independent challenge and scrutiny of the executive directors' proposals and performanceCorrect
- CPreparing the company's financial statements for approval
- DActing as the company's external auditors
Explanation
Non-executive directors do not run the business day to day. Their value lies in independent judgement, constructively challenging strategy and monitoring executive performance. Managing operations is an executive role, and preparing accounts is a management task.
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