Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Which of the following is a feature of poor corporate governance?

1. Lack of involvement of the board

2. Separation of powers among board members

3. High levels of transparency

4. Effective communication with stakeholders

The correct answer is: Lack of involvement of the board

A feature of poor corporate governance is indeed the lack of involvement of the board. When the board of directors is not actively engaged in the governance of the organization, it can lead to a variety of issues, including inadequate oversight of management, insufficient risk management, and a failure to align the company's activities with the interests of shareholders and stakeholders. This disengagement can result in poor decision-making and a lack of accountability, ultimately compromising the organization’s integrity and performance. On the other hand, the separation of powers among board members, high levels of transparency, and effective communication with stakeholders are all hallmarks of good corporate governance. These features enable better decision-making processes, foster trust and confidence in the management, and ensure that the interests of all stakeholders are considered in the governance process.