GIA Cert Governance Foundations flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Corporate Governance

The system of rules, practices, and processes by which an organisation is directed and controlled, allocating rights, responsibilities, and accountability among board, management, and shareholders.

Agency Theory

A theory holding that separating ownership from control creates conflicting interests between principals and agents, so monitoring, incentives, and disclosure are needed to reduce agency costs.

Comply or Explain

A governance approach requiring entities either to comply with each code provision or to disclose and justify any deviation, allowing flexibility while preserving transparency.

Stakeholder Theory

A view that organisations are accountable not only to shareholders but also to employees, customers, creditors, regulators, and communities affected by their activities.

Governance Chain

The sequence of delegated authority from shareholders to the board, and from the board to management and staff, with each level owing a duty to account upward.

Independent Non-Executive Director

A board member with no material employment, business, family, or advisory relationship with the company, expected to provide objective challenge to executive management.

Audit Committee

A board committee of independent non-executives responsible for overseeing financial reporting, internal control, internal audit, and the external auditor's independence and performance.

Board Reserved Matters

A defined schedule of decisions retained by the board, such as strategy, risk appetite, major transactions, and senior appointments, which cannot be delegated to management.

Board Evaluation

A structured annual assessment of board, committee, and director effectiveness, conducted internally or by an external facilitator, whose findings inform development and succession.

Skills Matrix

A tool mapping the competencies, experience, and diversity the board requires against those currently present, used to guide recruitment and succession planning.

Risk Appetite

The amount and type of risk an organisation is willing to accept in pursuit of its objectives, approved by the board and translated into quantified tolerance limits.

Three Lines Model

An assurance structure where operational management owns risk, risk and compliance functions monitor it, and internal audit provides independent assurance to the board.

COSO Internal Control Framework

A widely used framework comprising five components: control environment, risk assessment, control activities, information and communication, and monitoring activities.

Segregation of Duties

A preventive control separating authorisation, custody of assets, recording, and reconciliation so that no single individual can control an entire transaction cycle.

Residual Risk

The level of risk remaining after existing controls have been applied, compared against approved tolerance to determine whether further treatment or escalation is required.

Compliance Risk

The risk of legal or regulatory sanctions, financial loss, or reputational damage arising from failure to comply with applicable laws, regulations, and codes of conduct.

Whistleblowing Arrangements

Channels allowing confidential or anonymous reporting of wrongdoing, with protection from retaliation, independent investigation, and escalation to the audit committee.

Conflicts of Interest Register

A record of directors' and employees' interests, reviewed on appointment and on change, used to apply disclosure, recusal, or other management measures.

Tone at the Top

The ethical signals sent by board and executive behaviour, widely regarded as the strongest influence on organisational culture and compliance conduct.

Regulatory Obligations Register

A record mapping each applicable regulatory requirement to its owning policy, control, monitoring activity, and evidence source, supporting compliance and inspection.

Materiality

The threshold for disclosure: information is material if omitting or misstating it could influence the decisions of stakeholders relying on the report.

Shareholder Rights

Entitlements including voting on directors, auditors, and pay, receiving timely information, attending general meetings, and approving major transactions.

Stakeholder Mapping

An analysis of each stakeholder group's interest, influence, and legitimate expectations, used to prioritise engagement channels, frequency, and disclosure effort.

Integrated Reporting

A reporting approach connecting strategy, governance, performance, and prospects to explain how value is created or eroded over time across multiple capitals.

Governance Statement

A section of the annual report describing how the entity has applied the governance code, including compliance, deviations with reasons, and committee activity.

Internal Audit Independence

The arrangement whereby internal audit reports functionally to the audit committee, has unrestricted access to records, and holds no operational management responsibilities.

Audit Opinion Types

The four possible external audit conclusions: unmodified (clean), qualified, adverse, and disclaimer, reflecting the extent of misstatement or scope limitation found.

Key Audit Matters

Disclosures identifying the areas of highest assessed risk and significant auditor judgement in the audit, explaining how each matter was addressed.

Assurance Mapping

A consolidated view showing, for each principal risk, which assurance providers give coverage and how reliable that evidence is, revealing gaps or duplication.

Delegation of Authority

A schedule specifying monetary and decision limits for each role and committee, with matters above the limit escalating to the next level up to the board.

Policy Hierarchy

The layered structure of board-approved policies, management standards and procedures, and guidance, each with distinct approval authority and mandatory status.

Company Secretary

The officer responsible for statutory registers, board meeting processes, governance advice, and ensuring decisions are properly recorded and communicated.