ACCA Financial Management (F9) Certification Practice Exam

What is the focus of the system of corporate governance?

1. Management of financial resources only

2. Directing and controlling organizations

3. Employee training and development

4. Sales and marketing strategies

The correct answer is: Directing and controlling organizations

The system of corporate governance primarily focuses on directing and controlling organizations. This encompasses establishing frameworks and practices that ensure accountability, fairness, and transparency in a company's relationships with its stakeholders, including shareholders, management, customers, suppliers, financiers, government, and the community. Essentially, corporate governance dictates how an organization is run at the highest level, determining the decision-making processes and the way companies achieve their objectives while managing risk. Good corporate governance ensures that a company meets its legal and ethical obligations, thus promoting sustainable business practices and enhancing organizational performance. In contrast, the other options have a narrower focus. Management of financial resources deals specifically with the allocation and management of funds within an organization, which is just one aspect of governance. Employee training and development relates to workforce improvement and is vital for operational effectiveness but does not encompass the broader governance framework. Sales and marketing strategies focus on market engagement and revenue generation, not on the governance structure that oversees and guides overall corporate conduct and ethics.