Question 1

Decentralisation typically eliminates agency costs from for-profit organisations.

Accepted Answer

A) True 
 B)False  False

Question 2

A current theme in rewarding senior staff is which of the following?

Accepted Answer

A)  pay-for-performance 
B)  the place of government regulation 
C)  relative performance evaluation 
D)  all of the above are current themes in rewarding senior staff 
A)  pay-for-performance 
B)  the place of government regulation 
C)  relative performance evaluation 
D)  all of the above are current themes in rewarding senior staff D

Question 3

Whether compensation is structured to focus on the long-term depends on two key factors, firstly, the time horizon relating to the target measure and secondly, the 'lasting' nature of the reward itself.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of these is a not a policy in a banking group that would help reduce company risk?

Accepted Answer

A)  Requiring all employees to take regular holidays 
B)  Ensuring that incentive systems don't encourage excessive risk taking 
C)  Requiring more scrutiny of less successful traders and less of the more successful 
D)  None of the above, i.e. all are policies that would help reduce company risk 
A)  Requiring all employees to take regular holidays 
B)  Ensuring that incentive systems don't encourage excessive risk taking 
C)  Requiring more scrutiny of less successful traders and less of the more successful 
D)  None of the above, i.e. all are policies that would help reduce company risk

Question 5

Successful companies need to carefully balance management control and risk taking.

Accepted Answer

A) True 
 B)False

Question 6

Over the last 10-15 years there has been a decline in the use of share options as a component of executive remuneration.

Accepted Answer

A) True 
 B)False

Question 7

From a business owner's perspective, which of the following is an agency cost?

Accepted Answer

A)  Costs to provide appropriate incentive contracts for top management 
B)  General supplier price increases 
C)  Losses from poor economic conditions 
D)  Insufficient executive pay 
A)  Costs to provide appropriate incentive contracts for top management 
B)  General supplier price increases 
C)  Losses from poor economic conditions 
D)  Insufficient executive pay

Question 8

Share-based compensation rather than cash payments is used to encourage:

Accepted Answer

A)  a focus on short-term results 
B)  higher compensation for executives 
C)  a focus on long-range results 
D)  lower compensation for executives 
A)  a focus on short-term results 
B)  higher compensation for executives 
C)  a focus on long-range results 
D)  lower compensation for executives

Question 9

According to agency theory, under what circumstances could companies eliminate agency costs?

Accepted Answer

A)  If bonuses are based on financial performance 
B)  If they publish audited financial statements 
C)  If their shares are not traded on the stock exchange 
D)  Organisations cannot eliminate agency costs 
A)  If bonuses are based on financial performance 
B)  If they publish audited financial statements 
C)  If their shares are not traded on the stock exchange 
D)  Organisations cannot eliminate agency costs

Question 10

According to the CoCo (criteria of control) guidance on control integrated framework, the impact of a carbon pollution reduction scheme would be classed as which category of risk?

Accepted Answer

A)  Financial risk 
B)  Legal and regulatory risk 
C)  Strategic risk 
D)  Operational risk 
A)  Financial risk 
B)  Legal and regulatory risk 
C)  Strategic risk 
D)  Operational risk

Question 11

According to the CoCo (criteria of control) guidance on control integrated framework, a catastrophic computer failure would be classed as which category of risk?

Accepted Answer

A)  Financial risk 
B)  Legal and regulatory risk 
C)  Strategic risk 
D)  Operational risk 
A)  Financial risk 
B)  Legal and regulatory risk 
C)  Strategic risk 
D)  Operational risk

Question 12

Which of these is not a framework available to Australian top management when considering risk management?

Accepted Answer

A)  AS/NZS ISO 31000: 2009 Risk management principles and guidelines 
B)  The COSO Enterprise risk management framework 
C)  The Australian assurance standards - AAS 340 -900 
D)  All of the above are frameworks that are available 
A)  AS/NZS ISO 31000: 2009 Risk management principles and guidelines 
B)  The COSO Enterprise risk management framework 
C)  The Australian assurance standards - AAS 340 -900 
D)  All of the above are frameworks that are available

Question 13

Which of these researchers argued that extrinsic rewards do little in the long term to foster superior performance?

Accepted Answer

A)  Pink 
B)  Deming Kohn 
C)  Kohn 
D)  All of the above 
A)  Pink 
B)  Deming Kohn 
C)  Kohn 
D)  All of the above

Question 14

To protect shareholders from excessive compensation practices, executive compensation packages are best set by:

Accepted Answer

A)  A committee of primarily outside members of the board of directors 
B)  A committee of top management employees 
C)  The managing director 
D)  The complete board of directors 
A)  A committee of primarily outside members of the board of directors 
B)  A committee of top management employees 
C)  The managing director 
D)  The complete board of directors

Question 15

The use of a bonus bank in improving the pay-for-performance link means:

Accepted Answer

A)  that bonuses can be paid by direct bank transfer 
B)  that bonuses can paid immediately 
C)  that bonuses can be negative as well as positive. 
D)  b and c 
A)  that bonuses can be paid by direct bank transfer 
B)  that bonuses can paid immediately 
C)  that bonuses can be negative as well as positive. 
D)  b and c

Question 16

Management accountants now need to integrate the impact of external reporting rules on their risk management and internal control policies.

Accepted Answer

A) True 
 B)False

Question 17

Managers can best reduce agency costs by:

Accepted Answer

A)  Holding agents responsible for the results of their decisions and rewarding them for good performance. 
B)  Constantly monitoring agents' actions to ensure goal congruence. 
C)  Giving agents less decision-making authority. 
D)  Reporting residual income in their ASIC reports. 
A)  Holding agents responsible for the results of their decisions and rewarding them for good performance. 
B)  Constantly monitoring agents' actions to ensure goal congruence. 
C)  Giving agents less decision-making authority. 
D)  Reporting residual income in their ASIC reports.

Question 18

Because agents may not set the same goals and objectives as principals, organisations may experience which of the following general agency costs?
 I $\text {Goal aligriment costs}$
II $\text {costs caused by excharige rate movernents}$
III $\text {Monitoring costs}$

Accepted Answer

A)  II and III only 
B)  III only 
C)  I and III only 
D)  I, II, and III 
A)  II and III only 
B)  III only 
C)  I and III only 
D)  I, II, and III

Question 19

Costs for producing and analysing internal performance reports are an example of which type of agency costs?

Accepted Answer

A)  Losses from poor decisions 
B)  Monitoring costs 
C)  Goal alignment costs 
D)  Contracting costs 
A)  Losses from poor decisions 
B)  Monitoring costs 
C)  Goal alignment costs 
D)  Contracting costs

Question 20

In Australia, subsequent to the Global Financial Crisis, the government commissioned an investigation into the compensation of senior executives to be carried out by:

Accepted Answer

A)  the Productivity Commission 
B)  the AASB 
C)  the ASX 
D)  ASIC 
A)  the Productivity Commission 
B)  the AASB 
C)  the ASX 
D)  ASIC

Decentralisation typically eliminates agency costs from for-profit organisations.

A current theme in rewarding senior staff is which of the following?

Whether compensation is structured to focus on the long-term depends on two key factors, firstly, the time horizon relating to the target measure and secondly, the 'lasting' nature of the reward itself.

Which of these is a not a policy in a banking group that would help reduce company risk?

Successful companies need to carefully balance management control and risk taking.

Over the last 10-15 years there has been a decline in the use of share options as a component of executive remuneration.

From a business owner's perspective, which of the following is an agency cost?

Share-based compensation rather than cash payments is used to encourage:

According to agency theory, under what circumstances could companies eliminate agency costs?

According to the CoCo (criteria of control) guidance on control integrated framework, the impact of a carbon pollution reduction scheme would be classed as which category of risk?

According to the CoCo (criteria of control) guidance on control integrated framework, a catastrophic computer failure would be classed as which category of risk?

Which of these is not a framework available to Australian top management when considering risk management?

Which of these researchers argued that extrinsic rewards do little in the long term to foster superior performance?

To protect shareholders from excessive compensation practices, executive compensation packages are best set by:

The use of a bonus bank in improving the pay-for-performance link means:

Management accountants now need to integrate the impact of external reporting rules on their risk management and internal control policies.

Managers can best reduce agency costs by:

Because agents may not set the same goals and objectives as principals, organisations may experience which of the following general agency costs? I $\text {Goal aligriment costs}$ II $\text {costs caused by excharige rate movernents}$ III $\text {Monitoring costs}$

Costs for producing and analysing internal performance reports are an example of which type of agency costs?

In Australia, subsequent to the Global Financial Crisis, the government commissioned an investigation into the compensation of senior executives to be carried out by:

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Sustainability Management Accounting

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Exam 18: Rewards, Incentives and Risk Management

Decentralisation typically eliminates agency costs from for-profit organisations.

A current theme in rewarding senior staff is which of the following?

Whether compensation is structured to focus on the long-term depends on two key factors, firstly, the time horizon relating to the target measure and secondly, the 'lasting' nature of the reward itself.

Which of these is a not a policy in a banking group that would help reduce company risk?

Successful companies need to carefully balance management control and risk taking.

Over the last 10-15 years there has been a decline in the use of share options as a component of executive remuneration.

From a business owner's perspective, which of the following is an agency cost?

Share-based compensation rather than cash payments is used to encourage:

According to agency theory, under what circumstances could companies eliminate agency costs?

According to the CoCo (criteria of control) guidance on control integrated framework, the impact of a carbon pollution reduction scheme would be classed as which category of risk?

According to the CoCo (criteria of control) guidance on control integrated framework, a catastrophic computer failure would be classed as which category of risk?

Which of these is not a framework available to Australian top management when considering risk management?

Which of these researchers argued that extrinsic rewards do little in the long term to foster superior performance?

To protect shareholders from excessive compensation practices, executive compensation packages are best set by:

The use of a bonus bank in improving the pay-for-performance link means:

Management accountants now need to integrate the impact of external reporting rules on their risk management and internal control policies.

Managers can best reduce agency costs by:

Costs for producing and analysing internal performance reports are an example of which type of agency costs?

In Australia, subsequent to the Global Financial Crisis, the government commissioned an investigation into the compensation of senior executives to be carried out by:

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Sustainability Management Accounting

Filters