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audit compensation nominating |
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3 board committees that are required of listed companies by national stock exchanges |
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typical size of directors |
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a standing committee of the comapny's board of directors to act as a liason between managemnt and the external auditor |
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What committee is responsible for • Reviewing the performance of the current directors. • Assessing the need for new directors. • Identifying and evaluating the skills, background, diversity, and knowledge of candidates for the board. • Having an objective nominating process for qualified candidates to the board. • Assisting in the election of qualified new directors. |
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A committee composed of independent, nonexecutive directors charged with the oversight functions of ensuring responsible corporate governance, a reliable financial reporting process, an effective internal control structure, a credible audit function, an informed whistleblower complaint process, and an appropriate code of business ethics with the purpose of creating long-term shareholder value while protecting the interests of other stakeholders. |
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Board committee formed to implement and support the oversight function of the board particularly in areas relevant to the design, review, and the implementation of the directors’ and executives’ evaluation and compensation schemes. |
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Enterprise risk management |
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A process, effected by an entity’s board of directors, management, and other personnel, applied in strategy setting and to the whole enterprise, designed to identify potential events that may affect the entity, manage risk to be within its risk appetite, and provide reasonable assurance regarding the achievement of entity objectives. |
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Board committee consisting of both executive and nonexecutive directors established to advise, review, and approve management strategic plans, decisions, and actions in managing the company. |
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Independent board committee composed of at least three independent directors formed to implement and support the oversight function of the board pertaining to the recommendation, nomination, and election activities of directors. |
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Board committee composed of both executive and nonexecutive directors charged with advising and approving management strategic plans, decisions, and actions, with members of the board serving only on the governance or other special board committees. |
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Planning process designed to ensure proper planning for orderly succession to the company’s board and other senior executive positions. |
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what committee is responsible for • Overseeing the financial reporting process. • Monitoring the choice of accounting policies and principles. • Monitoring the internal control process. • Overseeing the hiring and performance of external auditors. |
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corporate governance committee |
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what committee is responsible for • Establishing the agenda for the board of directors to determine what the board should discuss with management and to what extent. |
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• Structure. • Proxy statement disclosure. • Responsibilities. |
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List the principles and practices for ensuring the effectiveness of the compensation committee as recommended by The Council of Institutional Investors (CII). |
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• Control the agenda and the meeting. • Review past agendas and minutes of meetings to ensure adequate time and discussion were devoted to each issue. • Revise the agenda as necessary and set priorities for meetings. |
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What are the responsibilities of the corporate governance committee? |
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(1) formation; (2) independence; (3) member qualifications; (4) authority; (5) funding; (6) oversight function; (7) accountability; (8) charter; (9) agenda; and (10) orientation, training, and continued education. These audit committee principles provide guidance designed to promote effective and efficient audit committees. |
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The ten audit committee principles |
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1. evaluating the perfromance of directors 2. evaluating the performance of executives 3. designing and implemtning compensation plans for directors and executives 4. disclosing the work of the committee |
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categories of the responsibilites of the compesnation committee |
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value added service that improves the orgainztion's operations, risk management, internal controls, and financial reporting |
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primarily responsible for managing, directing, and overseeing the internal audit fucntion |
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listed companies MUST have internal audit function; prviatelyheld and no for profit not mandated |
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`. objectives in line with stakeholder expectations 2. value driver identification 3. current state assessment of reviews and analysis of internal audit core processes, benchmarks, and best practices 4. soution development of preparing report findings, observations, and recommendations for imporvement in performance |
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four phase plan to appropriately assess internal audit quality and effectiveness |
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responsible for auditing the company's financial statements and providing reasonable assurance that they are prsented fairly and in conformity with GAAP and that they reflect true representation of the company's financial position and results of operations |
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securities exchange act of 1934 |
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set the requirement that companies that offer stock to the public in raising capital must have their financial statements audited by an independent public accountant |
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pertain to auditors' ability to choose appropriate evidence gathering procedures and esceute auditing procedures |
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refer to audtors' ability and wilingness to discover and report material misstatements |
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audit process failure independent audit failure |
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two categories of audit failure |
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regualtions and standars are more concerned with and address independet audit faioure rather than audit process failure |
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a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less evere than a material weakness, yet important enough to merit attention by those responsible for oversight of the comapny's financial reproting |
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a deficiency, or a combination of deficiencies in nternal control over finanical reproting, such that there is a reasonable possibliey that amaterila misstatement of the coapny's annual or interim financial statements will not be prevented or detected on a timely basis |
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unqualified adverse qualified/disclaimer |
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three types of audit opinions for ICFR |
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a process that is affected by the appointment of auditors, services sproicded by auditors, and the manner in which services are provided |
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consists of initiation and implemenation of strategies (management's responsiblity) |
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ntials the ratification and monitoring of strategies (board of directors' fiduciary duty) |
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(1) Represent shareholders by creating shareholder value. (2) Align the interests of management and shareholders, while protecting considering the interests of other stakeholders (e.g., customers, creditors, suppliers). (3) Define the corporation’s mission and goals. (4) Establish or approve strategic plans and decisions to achieve the mission and goals. |
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Roles and responsibilities of boards of directors |
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Duty of care Duty of loyalty Duty of good faith Duty to promote success Duty to exercise diligence, independent judgment, and skill Duty to avoid conflicts of interests Business judgment rule |
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Various fiduciary duties of directors |
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- Consists of both inside (executive) directors and outside (nonemployee) directors. Inside directors are perceived as the decision managers and outside directors are assumed to have the power and duty to monitor those decisions |
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Two-Tier Board Model (German board model) - |
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Consists of a supervisory board and a management board, with different authorities and responsibilities for members of each board |
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Proactively engaged in both a strategic and oversight activities |
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audit compensation nominating |
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three required board committeess by lsiting standards |
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Corporate governance Internal controls Financial reporting Audit activities Code of ethics conduct Whistleblower program Enterprise risk management Financial statement fraud |
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Audit committee oversight responsibilities categories |
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The committee should be composed of all independent directors who rotate periodically. |
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compensation committee composure |
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Evaluation of directors. Design and implementation of director compensation plans. Evaluation of senior executives. Design and implementation of executive compensation plans. |
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compensation commitee responsibilities |
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both executive and nonexecutive directors |
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Corporate Governance Committee composition |
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(1) reviewing the performance of current directors; (2) assessing the need for new directors; (3) identifying and evaluating the skills, background, diversity, and knowledge of candidates; (4) having an objective nominating process for qualified candidates; (5) assisting in the election of qualified new directors. |
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The nominating committee is responsible for |
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