CS Professional GRMCE 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 a company is directed and controlled, allocating rights and responsibilities among shareholders, board, and management.

Agency Problem

Conflict arising when managers acting as agents pursue their own interests rather than those of shareholders as principals, creating monitoring and bonding costs.

Apply-or-Explain

A governance approach requiring companies to either comply with code provisions or explain in their annual report why they departed from them.

Stakeholder Model

A governance view holding that directors should balance the interests of shareholders, employees, customers, suppliers, and communities, not shareholders alone.

Board Independence

The status of a director free from material business, employment, family, or tenure relationships that could compromise objective judgement of management.

Audit Committee

A board committee of independent directors responsible for overseeing financial reporting, internal controls, internal audit, and the external auditor relationship.

Fiduciary Duty

A director's legal obligation to act in good faith, in the company's best interests, with due care, skill, and diligence, and to avoid conflicts.

Board Evaluation

A periodic review of board, committee, and individual director effectiveness covering composition, dynamics, information quality, and decision-making.

Residual Risk

The level of risk remaining after existing controls and mitigating actions have been applied, compared against the organisation's risk appetite.

Risk Appetite

The amount and type of risk an organisation is willing to accept in pursuit of its strategic objectives, expressed in qualitative and quantitative terms.

Three Lines Model

A structure where management owns risk, risk and compliance functions provide oversight, and internal audit provides independent assurance to the board.

Key Risk Indicator

A forward-looking metric with defined thresholds that signals increasing risk exposure and triggers escalation before losses occur.

Compliance Risk

The risk of legal or regulatory sanctions, financial loss, or reputational damage from failure to comply with applicable laws, rules, and standards.

Compliance Monitoring

Ongoing testing and surveillance by the compliance function to verify that controls and business activities conform to regulatory requirements and internal policies.

Regulatory Breach Reporting

The obligation to notify the relevant regulator of a breach within prescribed time limits, providing complete and accurate information about the incident.

Segregation of Duties

A control that separates authorisation, custody, recording, and reconciliation so that no single person can complete and conceal a transaction.

Preventive Control

A control designed to stop an error, fraud, or unauthorised action before it occurs, such as access restrictions or approval requirements.

IT General Controls

Controls over the IT environment covering access management, change management, backup and recovery, and physical and environmental security.

Material Weakness

A control deficiency, or combination of deficiencies, that creates a reasonable possibility of material misstatement not being prevented or detected timely.

Conflict of Interest

A situation where a personal, financial, or other interest could improperly influence professional judgement, requiring disclosure, recusal, or avoidance.

Whistleblowing

A protected process by which employees confidentially or anonymously report suspected misconduct, with safeguards against retaliation and independent investigation.

Professional Scepticism

An attitude of questioning assumptions and critically evaluating evidence rather than accepting assertions at face value, central to audit and compliance.

Market Abuse

Insider dealing, unlawful disclosure of inside information, and market manipulation that undermine market integrity and fair treatment of investors.

Customer Due Diligence

Identifying customers, verifying identity, establishing beneficial ownership, and understanding the purpose of the relationship to manage money-laundering risk.

Sanctions Screening

Checking customers, transactions, and counterparties against designated sanctions lists to prevent dealings with prohibited persons or entities.

Internal Audit

An independent, objective assurance function evaluating the effectiveness of governance, risk management, and internal controls and recommending improvements.

Assurance Mapping

A technique that catalogues sources of assurance across risks to identify gaps, overlaps, and reliance that can be placed on each provider.

Audit Finding

A documented deficiency or improvement opportunity with its risk rating, root cause, agreed management action, responsible owner, and due date.

Stakeholder Salience

The degree to which managers prioritise stakeholder claims, determined by the stakeholder's power, legitimacy, and urgency.

Investor Stewardship

The responsible monitoring and engagement by institutional investors with investee companies to promote long-term value and good governance.

Materiality

The threshold at which information omission or misstatement could influence the economic decisions of users of financial statements or reports.

Continuous Disclosure

The obligation to announce inside information promptly to the market, subject to narrow permitted delays where confidentiality is preserved.