Skip to content

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

Which of the following is a recognised reason for including non-executive directors on a company's board?

Non-executive directors are included to provide independent judgement and to scrutinise and challenge executive management, bringing outside experience. They do not manage daily operations, maintain the accounting records or guarantee profits, since those are executive or management matters.

  1. AThey bring independent judgement and scrutiny of executive management's decisionsCorrect
  2. BThey are responsible for the day-to-day running of the company
  3. CThey prepare the accounting records and the trial balance
  4. DThey guarantee the company's profits to shareholders

Explanation

Non-executives are not involved in daily operations, so they can challenge strategy and performance objectively and contribute outside experience. They do not run the business, keep the accounting records, or guarantee profits. Their value lies in independence and oversight.

Did you get it right without looking?

One question tells you little. A timed set on Duties and responsibilities of those charged with governance shows your real accuracy, how long you take and where you lose marks.

Practise Duties and responsibilities of those charged with governanceFree diagnostic mock

More Duties and responsibilities of those charged with governance questions