Exercise 1

A. Boards need to consist of at least 3 independent directors or 1/3 of the board which is
higher.
Having independent directors will drastically affect the company's growth for success. Their
decision-making skills and fair independent judgements are needed. In addition, they could
formulate brilliant ideas for the company that can result in higher effectiveness and overall
efficiency.
B. Board needs to hold a regular executive sessions of independent directors without
management present.
With these sessions, independent directors can freely communicate and exchange information
themselves. Also, with these meetings directors can assess the company's current state while
addressing issues and planning for future ends or goals.
C. Boards must have a corporate governance committee composed at least 3 of the
independent directors.
This is to regulate and ensure that the board members are working effectively and efficiently; and
to avoid biases and prejudices in their work.
D. The corporate governance committee must have a written charter that addresses the
committee’s purpose and responsibilities, and there must be annual performance evaluation
of the committee.
These corporate policies will safeguard first and foremost, its goodwill and reputation. This will
be the foundations that the company is adhering to its mission and visions. By, having written
charters and annual performance evaluations, it will be the basis for the company course and what
actions it will take in the future.
E. Boards must have an audit committee with a minimum of three independent directors.
This will make certain that the company will not omit errors and provide information about internal
and external audits of the company
F. The audit committee must have a written charter that addresses the committee’s purpose
and responsibilities, and the committee must produce an audit committee report; there must
also be an annual performance evaluation of the committee.
This will make certain that the auditing commitee will comply to rules and regulations as well as
properly statement of the audit reports. Annual performance evaluation will determine on how the
company should improve and manage its audit committee to performance better

Exercise 2
 A. Obtaining each year a report by the external auditor that addresses the company’s internal
control procedures, any quality control or regulatory problems, and any relationships that
might threaten the independence of the external auditor.
This is to make sure that the company is abiding well to the regulatory standards and avoid arising
of conflicts. The external auditor will be able to detect if the company made such violations.
B. Discussing the company’s financial statements with the management and the external
auditor.
This is to ensure that the company’s financial statements are not fabricated, made an mistake or
have deliberately made an error
C. Discussing in its meetings the company’s earnings press releases, as well as financial
information and earnings guidance provided to analysts.
This is done for the sake of clean and transparent operations as well as, to be able to handle the
earnings and financial info.
D. Discussing in its meeting policies with respect to risk assessment and risk management.
Unforeseen events may cause great deal of loss and are very much risky to the company and to its
people working for it, That is why precautionary measures are set to avoid large scale loss and
must be followed when a problem occurs
E. Meeting separately with management, internal auditors, and the external auditor on a
periodic basis.
For them to be able to do their profession (managers and auditors) more effiecient and effective
with integrity. This is also to avoid deliberation of fraud amongst them.
F. Reviewing with the external auditor any audit problems or difficulties that they had with
management.
This is to make sure that if the audit reports have issues, it will be resolve immediately and avoid
complications of problem much later
G. Setting clear hiring policies for employees or former employees of the external auditor.
For quality performance and highest efficiency possible, hiring select qualified employees will
provide their best in an honest and dignified manner
H. Reporting regularly to the board of directors.
As the board of directors, they have the executive power to run the company into its proper course, in
doing so they need information from the lower deparments, to analyze and to make sound decisions for
the internal and external controls to the company. This will also help to better their qualities as a
company; as well as managing risks and running the corporate entity.