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CMA Intermediate · Business Laws and Ethics · Internal Financial Control for Financial Reporting

Under the Code for Independent Directors (Schedule IV), which duty of an independent director relates directly to internal financial controls?

An independent director must satisfy themselves that financial information is reliable and that financial controls and risk management systems are robust and defensible. This is an oversight duty. They do not write the books, act as internal auditor or approve each payment.

  1. ATo satisfy themselves on the integrity of financial information and that financial controls and risk management systems are robust and defensibleCorrect
  2. BTo prepare the company's books of account personally
  3. CTo act as the internal auditor of the company
  4. DTo approve every payment made by the company

Explanation

Independent directors must satisfy themselves about the integrity of financial information and that financial controls and systems of risk management are robust and defensible. They oversee the controls. They do not keep books, perform internal audit or approve each payment.

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