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

Which of the following best describes corporate governance in the context of FA?

Corporate governance is the system by which companies are directed and controlled. The board of directors is responsible for it, setting strategy, overseeing management and being accountable to shareholders. It is not about producing accounts, computing tax or registering the company.

  1. AThe system by which companies are directed and controlledCorrect
  2. BThe process of preparing financial statements under IFRS Accounting Standards
  3. CThe method of calculating a company's taxable profit
  4. DThe procedure for registering a company with the regulator

Explanation

Corporate governance is the system by which companies are directed and controlled, normally led by the board of directors. Preparing statements and tax computations are separate activities, and registration is a legal formality, not governance.

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