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    PracticeACCAACCA BT — Business & Technology Practice Exam 4Question 35
    Medium1 markMultiple Choice
    Syllabus B: Organisational structure, culture, governance and sustainabilitySyllabus BCorporate GovernanceAudit Committee

    ACCA · Question 35 · Syllabus B: Organisational structure, culture, governance and sustainability

    Section A

    According to corporate governance best practices, who should comprise the Audit Committee of a publicly listed company?

    Answer options:

    A.

    A mix of Executive and Non-Executive Directors

    B.

    Independent Non-Executive Directors only

    C.

    The external auditors and the Chief Financial Officer

    How to approach this question

    The Audit Committee oversees the financial reporting of the executives. Therefore, executives cannot be on it. It must be 100% independent.

    Full Answer

    B.Independent Non-Executive Directors only✓ Correct
    Corporate governance codes (such as the UK Corporate Governance Code) stipulate that the Audit Committee should consist entirely of independent Non-Executive Directors (NEDs). This ensures they can objectively scrutinize the financial statements and internal controls without conflicts of interest.

    Common mistakes

    Thinking the CFO should be on the committee because it deals with finance. The CFO is invited to meetings but is not a member.
    Question 34All questionsQuestion 36

    Practice the full ACCA BT — Business & Technology Practice Exam 4

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