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CIMAPRA19-E02-1 Exam - Topic 5 Question 98 Discussion

In preparation for listing on the UK stock market a company has started to set up the various committees needed to comply with the UK Corporate Governance Code.Ithasidentified the need for an Audit Committee and haslisted thecharacteristics below but are not sure if they are all correct.Which of the options below is NOT a characteristic of the Audit Committee?
C) Comprises of a majority of non-exective directors
A) Sets the external audit fee
B) Comprises of non-executive directors
D) Recommends appointment and removal of external auditors

CIMAPRA19-E02-1 Exam - Topic 5 Question 98 Discussion

Actual exam question for CIMA's CIMAPRA19-E02-1 exam
Question #: 98
Topic #: 5
[All CIMAPRA19-E02-1 Questions]

In preparation for listing on the UK stock market a company has started to set up the various committees needed to comply with the UK Corporate Governance Code.

Ithasidentified the need for an Audit Committee and haslisted thecharacteristics below but are not sure if they are all correct.

Which of the options below is NOT a characteristic of the Audit Committee?

Show Suggested Answer Hide Answer
Suggested Answer: C

by Taryn at Sep 15, 2024, 01:20 AM

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Elli
9 months ago
I’m surprised that’s even a question! Isn’t that a basic function?
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Ardella
10 months ago
Wait, can they really set the external audit fee? That seems off.
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Keneth
10 months ago
Yeah, they definitely recommend the appointment of external auditors.
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Doretha
10 months ago
I thought they needed a majority of non-executive directors too.
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Glenna
10 months ago
Audit Committees usually have non-executive directors.
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Pura
10 months ago
I thought the Audit Committee was supposed to have a majority of non-executive directors, but now I'm questioning if that's a strict requirement or just a best practice.
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Kaitlyn
11 months ago
I feel like all the options listed are typical roles of an Audit Committee, but I have a nagging doubt about whether they actually set the external audit fee.
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Dorothy
11 months ago
I remember studying that the committee should mainly consist of non-executive directors, but I can't recall if they need a majority.
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Page
11 months ago
I think the Audit Committee definitely has to recommend the appointment of external auditors, but I'm not sure about the fee-setting part.
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Trinidad
11 months ago
I've got a good strategy for this. I'll first identify the key responsibilities of the Audit Committee, then evaluate each option against that to determine which one doesn't fit.
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Chu
11 months ago
I'm a bit confused by this question. The characteristics listed seem to be all correct, so I'm not sure which one is not a characteristic. I'll need to re-read the options carefully.
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Gwenn
11 months ago
Hmm, I'm a bit unsure about this one. The options seem quite similar, so I'll need to carefully read through each one to determine which is not a characteristic.
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Carolynn
11 months ago
This seems like a straightforward question on the characteristics of an Audit Committee. I'm confident I can identify the one that is not a characteristic.
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Terry
11 months ago
Okay, let me think this through step-by-step. The Audit Committee is responsible for overseeing the financial reporting and audit process, so I'll need to evaluate each option against that role.
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Jennie
2 years ago
The audit committee needs to be made up of a majority of non-executive directors to ensure their independence. That's a key principle of good corporate governance.
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Richelle
2 years ago
D) Recommends appointment and removal of external auditors
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Loren
2 years ago
C) Comprises of a majority of non-executive directors
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Hayley
2 years ago
B) Comprises of non-executive directors
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Alita
2 years ago
A) Sets the external audit fee
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Timothy
2 years ago
Haha, I bet the company's finance team wishes they could set the audit fee. 'Sorry, we're a little short this quarter. How about half-price?'
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Jeannine
2 years ago
I'm surprised that option A is even on the list. Isn't that a basic no-no for corporate governance?
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Mollie
2 years ago
C) Comprises of a majority of non-executive directors
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Paris
2 years ago
B) Comprises of non-executive directors
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Rodolfo
2 years ago
A) Sets the external audit fee
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Kiley
2 years ago
Yup, I agree. The audit committee should be independent of the company's management, so they can provide objective oversight.
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Yuriko
2 years ago
C) Comprises of a majority of non-executive directors
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Wilda
2 years ago
B) Comprises of non-executive directors
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Jodi
2 years ago
A) Sets the external audit fee
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Dianne
2 years ago
I also think option A is the correct answer. The Audit Committee recommends the appointment and removal of external auditors.
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Alva
2 years ago
I agree with Sophia. The Audit Committee does not set the external audit fee.
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Sophia
2 years ago
I think option A is NOT a characteristic of the Audit Committee.
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Laurel
2 years ago
The audit committee should not be setting the external audit fee. That's a clear conflict of interest!
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Adell
2 years ago
D) Recommends appointment and removal of external auditors
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Omer
2 years ago
C) Comprises of a majority of non-executive directors
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Tennie
2 years ago
B) Comprises of non-executive directors
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Graciela
2 years ago
A) Sets the external audit fee
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