ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,

RISK MANAGEMENT AND INTERNAL CONTROL

Student Activity Sheet Module #3

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule:_______________________________________ Date: _______________

Lesson title: Corporate Governance Responsibilities and Materials: Textbook: Corporate

Accountabilities Governance, Business Ethics, Risk
Lesson Objectives: Management and Internal Control
At the end of this module, I should be able to: 2019-2020 edition
1. Understand relevance of good governance to both large References:
publicly-listed companies and SMEs. [Link]
2. Outline the relationship between shareholders or owners and s
other stakeholders and identify parties in CG. [Link]
[Link]/
1. [Link]
Directory
[Link]
urli/corporate-governance-a-
conceptual-framework

Productivity Tip: Tell your friends and family that you are entering a study mode. You get your pen and
paper and list down things that matters to you. Eliminate that “what if” thoughts to unlock your confidence.

A. LESSON PREVIEW/REVIEW
1) Introduction (5 mins)
Activity 1, part 1 Do Now Task
Rank the following as to how you see yourself 5 years from now – 1 being the highest rank you think
you want and can be and 0 for position you think you will never be.

Position Rank
Stockholders
Directors
Managers
Employees
Creditors
Auditors
Others (please specify)

Wherever you see yourself, your role is important. In this module we will continue our discussion about
corporate governance. Why is CG necessary for businesses, who are involved and what are their
accountabilities?

In relation to the ranking you’ve done, now list down 3 reasons where you ranked yourself 1 and another 3
where you least likely ranked yourself.
Position for the highest Rank: _____________________
Reasons:

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 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Student Activity Sheet Module #3

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule:_______________________________________ Date: _______________

1. ________________________
2. ________________________
3. ________________________

Position for the lowest Rank: _____________________

Reasons:
1. ________________________
2. ________________________
________________________

2) Activity 1: What I Know Chart, part 1 (3 mins)

Try answering the questions below by writing your ideas under the first column What I Know. It’s okay if
you write key words or phrases that you think are related to the questions.
What I Know Questions: What I Learned (Activity 4)
What are the reasons why SMEs
need to apply the characteristics
of good governance?

What are the responsibilities of

Shareholders?

What is the essence of any

system of good governance?

[Link] LESSON
1) Activity 2: Content Notes (13 mins)
LO1: Relevance of Good Governance to SMEs and Publicly listed companies

Small Medium Enterprise

 are businesses that maintain revenues, assets or a number of employees below certain
threshold.
 Each country has its own definition of what constitutes a SMEs.

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 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Student Activity Sheet Module #3

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule:_______________________________________ Date: _______________

 Businesses with not more than 100M assets and not more than 199 employees.
 Example: Marikina shoemakers

Publicly-listed Companies
 A company that has held an initial public offering and whose shares are traded on a stock
exchange in the over-the-counter market.
 Example, ABS CBN, PHINMA Corp, Ayala Corp, etc.

Regardless of the size and type, the issue on good governance has become increasingly important. Note
that there is no single universal formula for a good corporate governance. All organization are encouraged
to give appropriate attention to the principles and adopt approaches which are tailored to the specific needs
of the organization at a given point in time. The essence of any good corporate governance system is to
allow the board and management the freedom to drive their organization forward and exercise it within the
framework of effective accountability.

LO2: Relationship of Shareholders and Other Stakeholders

Below shows the framework of Corporate Governance:

Public Corporation
Stakeholders
Shareholders/Owners
Board of Directors
External Auditors
Delegate Exceutive Management

Shareholders/Owners Have
Regulators
Operational
Responsibilities
Management
Society and Others
Accountabiliyies

Internal Auditors

There is a clear-cut distinction between ownership and professional management of the company. And all
stakeholders are informed about the day to day operations through various reports and data.

1. Shareholders delegate responsibilities through an elected board of directors to management to

operating units with oversight and assistance from internal auditors.
2. Board of Directors and its audit committee oversee management to protect shareholders rights.
3. Management and the board are accountable to the shareholders.
Management and the board are also responsible to act within the laws of society and to meet various
requirements of creditors, employees and the stakeholders.

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 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Student Activity Sheet Module #3

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule:_______________________________________ Date: _______________

LO3: Responsibilities of Member of the Corporate Governance

Party Overview of Responsibilities

Shareholders a. Provide effective oversight through election of
board members
b. Approval of major initiatives such as buying
and selling stocks, annual report on
management compensation
Board of Directors 1) Overall Operations
 Establishing organization mission, vision
and ethical standards.
 Delegating an appropriate level of
authority to management
 Demonstrating leadership
 Assuming responsibility for the business
relationship with COE including his or her
appointment, succession, performance,
remuneration and dismissal.
 Overseeing aspects of the employment of
the management team.
 Recommending auditors and new
directors to shareholders
 Ensuring effective communication with
shareholders and other stakeholders.
 Crisis Management
 Appointment of the CEO and corporate
secretary
2) Performance
 Ensuring long term viability and
enhancing financial position
 Formulate and oversee implementation of
corporate strategy
 Approving the plan, budget and corporate
policies
 Agreeing Key performance Indicators
(KPI)
 Monitoring/ assessing assessment,
performance of the organization, the
board itself, management and major
projects.

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 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Student Activity Sheet Module #3

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule:_______________________________________ Date: _______________

 Overseeing the risk management

framework and monitoring business risk
 Monitoring development in the industry
and the operating environment
 Oversight of and the organization,
including its control and accountability
systems.
 Approving and monitoring the progress of
major capital expenditure, capital
management and acquisition and
divestitures.
3) Compliance
 Understanding and protecting the
organization’s financial position
 Requiring and monitoring legal and
regulatory compliance
 Approving annual financial reports,
annual reports and other public
documents/sensitive reports.
 Ensuring effective system of internal
controls.
 To understand that his role is not to act as
Independent Directors auditor, nor as a member of management
team.
 To understand the organizations, its
business, its operating environment and
financial position
 To apply expertise and skills in organization’s
best interest
 To assist management to keep performance
objectives at the top of agenda
 To respect the collective, cabinet nature of
the board’s decision
 To prepare for and attend board meeting
 To seek information on a timely basis to
ensure that he is in position to contribute to
the discussion when a matter comes before
the board or alert the chairman in advance to
the need of further information
 To ask appropriate question relative to
operations.

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 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Student Activity Sheet Module #3

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule:_______________________________________ Date: _______________

Management Board Role: Manage the organization effectively,

provide accurate and timely reports to the
shareholders and other stakeholders
 Recommend the strategic direction and
translate the strategic plan into the operation
of the business
 To run the business
 Assume day to day responsibility for the
organization conformance with relevant laws
and regulations and its compliance
framework.
 Develop, implement and manage the
organization risk management and internal
control framework
 Develop, implement and update policies and
procedures
 Be alert to relevant trend in the industry
 Provide information to the board
 Act as conduit between board and
organization
 Develop financial and other reports to meet
public, stakeholders and regulatory
requirement.
Audit Committee of Board of Directors Broad Role: provide oversight of the internal and
external audit function and the process of preparing
annual financial statement a well as public reports on
internal control.
 Selecting the external audit firm
 Approving any non-audit work performed by
the audit firm
 Selecting or approving of Chief Audit
Executive
 Reviewing and approving the scope and
budget of internal audit function
 Discussing audit findings with internal auditor
and external auditor and advising the board

Regulators
A. Board of Accountancy Board Role: Set accounting and auditing standards
dictating underlying financial reporting and auditing

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 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Student Activity Sheet Module #3

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule:_______________________________________ Date: _______________

concepts; set of expectation of audit quality and

accounting quality.
 Conducting CPA Licensure Board
Examinations
 Approving accounting principles
 Approving auditing standards
 Interpreting previously issued standards
implementing quality control processes to
ensure audit quality.
 Educating members on audit and accounting
requirements
B. Securities and Exchange Commission Board Role: Ensure the accuracy, timeliness and
fairness of public reporting of financial and other
information for public companies.
 Reviewing filing with the SEC
 Interacting with FRSC in setting accounting
standards
 Specifying independence standards required
of auditors that report on public financial
statements
 Identify corporate frauds, investigative
causes, and suggest remedial actions.
External Auditors Board Role: Performs audit of company financial
statements to ensure that the statements are free of
material misstatements including misstatements that
maybe due to fraud.
 Audit of public company financial statements
 Audit of nonpublic company financial
statements
 Other services such as tax or consulting
Internal Auditors Board Role: Perform audit of companies for
compliance with company policies and laws, audit to
evaluate efficiency of operations, and periodic
evaluation and test of controls.
 Reporting results and analysis to
management and audit committee
 Evaluating internal control

This document is the property of PHINMA EDUCATION

 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Student Activity Sheet Module #3

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule:_______________________________________ Date: _______________

2) Activity 3: Skill-building Activities (18 mins + 2 mins checking)

Think and learn
Does good governance require absolute rules that must be adopted by all organization? Explain.

In reference to the figures above in LO2, on what aspects do shareholders demand accountability from
the BOD?

Describe the broad role of the shareholders of the corporation.

3) Activity 4: What I Know Chart, part 2 (2 mins)

For this part, review the questions in the What I Know Chart from Activity 1 and write your answers to
the questions based on what you now know in the third column of the chart.

4) Activity 5: Check for Understanding (5 mins)

1. Stakeholders are
a. directors
b. employees
c. auditors
d. all of the above
2. Approving annual financial reports and other public documents are specific responsibilities of
a. management
b. Board of Directors
c. Shareholders
d. Employees
3. Which of the following is not something performed by the company’s board?

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 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Student Activity Sheet Module #3

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule:_______________________________________ Date: _______________

a. Appoints the corporate officers responsible for managing the company and implementing this
strategy.
b. Oversees management and ensures the quality of information provided to shareholders and to
financial markets through the financial statements.
c. Day to day supervision of the sales manager.
d. Defines the company’s strategy.
4. Which of the following is not responsibility of audit committee?
a. Management compensation.
b. Relations with independent auditor.
c. Monitoring management.
d. Reviewing corporate reporting process.
5. An independent director is expected to
a. Apply expertise and skills in the corporation’s best interest.
b. Assist management to keep performance objectives at the top of its agenda.
c. Respect the collective cabinet nature of the board’s decision.
d. Act as conduit between board and organization.

C. LESSON WRAP-UP
1) Activity 6: Thinking about Learning (5 mins)
Congratulations for finishing this module! Shade the number of the module that you finished.

Did you have challenges learning the concepts in this module? If none, which parts of the module helped you
learn the concepts?
________________________________________________________________________________________
________________________________________________________________________________________

Some question/s I want to ask my teacher about this module is/are:

________________________________________________________________________________________
________________________________________________________________________________________

FAQs
Did you know
1. What is the difference between shareholders and stakeholders?

 Shareholders are always stakeholders in a corporation, but stakeholders are not always shareholders.
 Shareholders owns a part of a public company through shares of stock, while stakeholders has an

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 ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL
Student Activity Sheet Module #3

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule:_______________________________________ Date: _______________

interest in the performance of a company for a reason other than stock performance or appreciation.

2. Are the CEO and the Chairman of the Board the same person?

 No. The CEO and the board chairperson perform different duties.
 CEO is the top senior executive over management while board chairperson is the head if the board of
directors.
 CEO position entails focusing on the strategic plan, which include strategizing about the competition
and which market to enter while chairman of the board is charged with protecting the investor’s best
interest and ensures that the company is stable and profitable.

KEY TO CORRECTIONS

Introduction:
It depends on student’s own perspective with himself. The goal is to help the student aligned his
thinking with his goal.

Activity 3:
Does good governance require absolute rules that must be adopted by all organization? Explain.
Answer: NO. It is true that there must be a good governance for any organization regardless of size but
there are no universal rules. Organization could design its own rules and its affectivity depends on

In reference to the figures above, on what aspects do shareholders demand accountability from the
BOD?
Answer: They demand accountability on the
1. Financial performance
2. Financial Transparency
3. Stewardships
4. Quality of Internal Control

Describe the broad role of the shareholders of the corporation.

Answer:
 Provide effective oversight through election of board members
 Approval of major initiatives such as buying and selling stocks, annual report on management
compensation

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