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

Actual exam question for CIMA's CIMAPRA19-E02-1 exam

Question #: 98
Topic #: 5

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?

ASets the external audit fee

BComprises of non-executive directors

CComprises of a majority of non-exective directors

DRecommends appointment and removal of external auditors

Show Suggested Answer

Suggested Answer: C

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

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Elli

6 months ago

I’m surprised that’s even a question! Isn’t that a basic function?

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Ardella

6 months ago

Wait, can they really set the external audit fee? That seems off.

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Keneth

6 months ago

Yeah, they definitely recommend the appointment of external auditors.

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Doretha

7 months ago

I thought they needed a majority of non-executive directors too.

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Glenna

7 months ago

Audit Committees usually have non-executive directors.

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Pura

7 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

7 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

8 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

8 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

8 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

8 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

8 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

8 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

8 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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