Certified Financial Management Specialist Practice Exam

What does corporate governance include in its scope?

1. Only financial disclosures

2. Every sphere of management

3. Only risk assessments

4. Employee engagement strategies

The correct answer is: Every sphere of management

The scope of corporate governance is broad and encompasses every sphere of management within an organization. It not only covers the financial disclosures and risk assessments associated with the company but also involves the overall direction, control, and accountability of the organization. Good corporate governance includes a framework that ensures the company operates in a responsible and ethical manner, considering the interests of all stakeholders, including shareholders, management, customers, suppliers, financiers, government, and the community. In addition to the high-level oversight of management decisions, corporate governance also addresses how various aspects of the organization, such as operational efficiency, compliance with laws and regulations, and effective communication with stakeholders, are managed. Because of this comprehensive nature, it goes beyond specific areas like financial disclosures or risk assessments and includes policies and practices related to employee engagement, corporate responsibility, and strategic planning, making it a holistic approach to management.