Acca paper F1 fia diploma in Accounting and Business Accountant in Business (AB/fab) exam kit

S EC T I O N 3
K APLA N PUBLISH ING
141 
144 D 
Owning the shares creates a direct link between a company’s performance and the NED’s 
wealth, thus rendering him/her non-independent. Note that NEDs should not have worked 
for the company as an employee for the last five years or serve as a NED for more than 9 
years with the same company. It is worth noting that non-independent NEDs can be chosen 
by the company – as long as there is a majority of independent NEDs on the board and 
appropriate disclosures are made. 
145 A 
An audit committee should, amongst other things, review accounting policies and financial 
statements as a whole to ensure that they are appropriate and balanced. 
146 B 
Companies are required by law to send a copy (or a summarised version) to each 
shareholder. Most companies will post a copy on their web site or will provide a paper- 
based copy free of charge to any member of the public who requests one. 
147 C 
Distractors A and B should have been eliminated by the references to ‘legally binding’, 
‘must adhere’ and ‘detailed rules’. Distractor D suggests that corporate governance relates 
to management and administration at the operational level, where in fact corporate 
governance is about ensuring standards are set at the highest levels of an organisation 
through appropriate mechanisms, which can filter down to operations.
Codes of practice are usually associated with a principles-based approach rather than a 
rules-based approach, so successful candidates were directed to the correct response by 
the words ‘guidance’ and ‘should adopt’. 
148 A 
Ad-hoc stands for ‘for the purpose’ and the committee is likely to be disbanded as soon as 
the issue for which it was created is resolved. 
149 D 
Part of the Chairman’s role is to maintain order, whereas A, B and C are a part of the role of 
Secretary.