CIMA BA4 · Chapter 7 · Question 10 of 10
Which statement about the board's responsibility for risk management in a listed company is most consistent with good governance practice?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) The board should determine the nature and extent of the principal risks it is willing to take and review the effectiveness of risk management and internal control at least annually
Explanation
Governance codes require the board to determine the principal risks it is willing to take in pursuing objectives (its risk appetite), maintain sound risk management and internal control systems and review their effectiveness at least annually. Responsibility cannot be delegated to the auditor, and risk cannot and should not be eliminated, since taking risk is needed to earn returns.
More Internal control, risk and audit MCQs
- Q2Who is ultimately responsible for a company's system of internal control?
- Q3Requiring two separate people to authorise and record a payment is an example of which type of control?
- Q4Which of the following best describes the 'control environment'?
- Q5Which of the following is a key difference between internal audit and external audit?
- Q6To whom should the head of internal audit ideally have direct access in order to protect independence?