WGU - D550 EXAM PREP QUESTIONS AND
ANSWERS FOR THE FINAL PAPER 2026.
⫸ Internal Mechanisms. Ans: help manage, direct, and monitor the
corporate governance activities to create substainable stakeholder
value
⫸ the board of directors (particularly independent directors), the
audit committee, management, IC, and the internal audit function.
Ans: What are some examples of internal mechanisms?
⫸ External Mechanisms. Ans: intended to monitor the company's
activities, affairs, and performance to endure that the interests of
insiders (management, directors, and officers) are aligned with the
interests of outsiders (shareholders and other stakeholdders)
⫸ financial markets, state and federal statutes, SEC regulations,
court decisions, and shareholder proposals. Ans: What are some
examples of external mechanisms?
⫸ Due Care. Ans: provides that a director or officer act in good faith,
exercise the care that an ordinarily prudent person would exercise in
similar circumstances, and act in a way that is considered to be in the
interests of the corporation
⫸ Duty of Loyalty. Ans: requires faithfulness; a director must place
the interests of the corporation ahead of their personal interest
,⫸ Good Faith. Ans: requires an honesty of purpose that leads to
caring for the well-being of the constituents of the fiduciary
⫸ Business Judgement Rule. Ans: a corporate director or officer may
be able to avoid liability to the corporation or to its shareholders for
poor business judgements
⫸ - directors must be independent and disinterested as to the matter
acted upon
- director must act with due care and in good faith
- the burden of proof is on the party challenging the board's decision,
to establish facts rebutting the presumption in favor of upholding the
decision. Ans: To obtain the business judgement rule's protection:
⫸ Chancery Court. Ans: the preeminent forum for the resolution of
commercial business litigation matters including the duties of officers
and directors
⫸ to be an equity court - to provide relief suited to the circumstances
when no adequate remedy if available at law. Ans: What is the
foundational purpose of the chancery court?
⫸ "Accountability aligns with how closely workplace decisions align
with a firm's strategic direction and it compliance with ethical and
legal consideration. Oversight provides a system of checks and
balances that limit employees and managers opportunities to deviate
,from from policies and strategies aimed at preventing unethical and
illegal activities. Control is the process of auditing a improving
organizational decisions and actions". Ans: What was the
characterization of corporate governance provided by Ferell et al?
⫸ - maximize shareholder wealth
- represnt all stakeholders
- stewardship function - fiduciary duty of managers. Ans: The role of
corporate governance systems is to:
⫸ to appoint nonexecutive (members of the board who are not apart
of the executive team) directors to the audit committee. Ans: What is
an example of corporate governance oversight and regulation?
⫸ - independent directors must comprise a majority of the board
- company must have a minimum three-member audit committee
composed of entirley independent auditors
- the audit committee must meet the requirements enumerated in Sec
301 of SOX and the Securities Exchange Acts Rule 10A-3(b)(1)
- SEC regulation S-K required disclosure in annual reports whether or
not the audit committee includes at least one "financial expert". Ans:
Public companies in the US that list their equity securities on the New
York Stock Exchange (NYSE) or the Nasdaq Stock Market are
required to have in place a board of directors with:
⫸ Sec 301 of SOX. Ans: prohibits a director from accepting any
direct or indirect consulting, advisory, or other compensatory fee from
, the listed company other than compensation for director service and
not being affiliated with the company or its subsidiaries
⫸ - to meet at least annually with the independent auditor and review
the audit report describing independent auditors internal quality
control procedures
- to discuss all relationships between the independent auditor and the
company and to enable assessment of the auditors independence
- to discuss earnings, press release, and financial information and
earnings guidance given to analysist and rating agencies
- to discuss policies with respect to risk management and risk
assessment
- to meet separately, from time to time, with management, with
internal auditors, and with independent auditors
- to reveiw with the independent auditor any audit problems or
difficulties and management's response to such issues
- to report regularly to the board of directors
- to evaluate the work of the audit committee annually. Ans: What are
the key audit committee responsibilities?
⫸ Corporate Social Repsonsibility. Ans: refers to the ethical
expectations that society has for business, ethical repsonsibilities are
those things that we ought to, or should do, even if we prefer not to
⫸ sexual harassment, other forms of discrimination, and workplace
safety. Ans: Corporations have an ethical responsibility to prevent
harm such as:
ANSWERS FOR THE FINAL PAPER 2026.
⫸ Internal Mechanisms. Ans: help manage, direct, and monitor the
corporate governance activities to create substainable stakeholder
value
⫸ the board of directors (particularly independent directors), the
audit committee, management, IC, and the internal audit function.
Ans: What are some examples of internal mechanisms?
⫸ External Mechanisms. Ans: intended to monitor the company's
activities, affairs, and performance to endure that the interests of
insiders (management, directors, and officers) are aligned with the
interests of outsiders (shareholders and other stakeholdders)
⫸ financial markets, state and federal statutes, SEC regulations,
court decisions, and shareholder proposals. Ans: What are some
examples of external mechanisms?
⫸ Due Care. Ans: provides that a director or officer act in good faith,
exercise the care that an ordinarily prudent person would exercise in
similar circumstances, and act in a way that is considered to be in the
interests of the corporation
⫸ Duty of Loyalty. Ans: requires faithfulness; a director must place
the interests of the corporation ahead of their personal interest
,⫸ Good Faith. Ans: requires an honesty of purpose that leads to
caring for the well-being of the constituents of the fiduciary
⫸ Business Judgement Rule. Ans: a corporate director or officer may
be able to avoid liability to the corporation or to its shareholders for
poor business judgements
⫸ - directors must be independent and disinterested as to the matter
acted upon
- director must act with due care and in good faith
- the burden of proof is on the party challenging the board's decision,
to establish facts rebutting the presumption in favor of upholding the
decision. Ans: To obtain the business judgement rule's protection:
⫸ Chancery Court. Ans: the preeminent forum for the resolution of
commercial business litigation matters including the duties of officers
and directors
⫸ to be an equity court - to provide relief suited to the circumstances
when no adequate remedy if available at law. Ans: What is the
foundational purpose of the chancery court?
⫸ "Accountability aligns with how closely workplace decisions align
with a firm's strategic direction and it compliance with ethical and
legal consideration. Oversight provides a system of checks and
balances that limit employees and managers opportunities to deviate
,from from policies and strategies aimed at preventing unethical and
illegal activities. Control is the process of auditing a improving
organizational decisions and actions". Ans: What was the
characterization of corporate governance provided by Ferell et al?
⫸ - maximize shareholder wealth
- represnt all stakeholders
- stewardship function - fiduciary duty of managers. Ans: The role of
corporate governance systems is to:
⫸ to appoint nonexecutive (members of the board who are not apart
of the executive team) directors to the audit committee. Ans: What is
an example of corporate governance oversight and regulation?
⫸ - independent directors must comprise a majority of the board
- company must have a minimum three-member audit committee
composed of entirley independent auditors
- the audit committee must meet the requirements enumerated in Sec
301 of SOX and the Securities Exchange Acts Rule 10A-3(b)(1)
- SEC regulation S-K required disclosure in annual reports whether or
not the audit committee includes at least one "financial expert". Ans:
Public companies in the US that list their equity securities on the New
York Stock Exchange (NYSE) or the Nasdaq Stock Market are
required to have in place a board of directors with:
⫸ Sec 301 of SOX. Ans: prohibits a director from accepting any
direct or indirect consulting, advisory, or other compensatory fee from
, the listed company other than compensation for director service and
not being affiliated with the company or its subsidiaries
⫸ - to meet at least annually with the independent auditor and review
the audit report describing independent auditors internal quality
control procedures
- to discuss all relationships between the independent auditor and the
company and to enable assessment of the auditors independence
- to discuss earnings, press release, and financial information and
earnings guidance given to analysist and rating agencies
- to discuss policies with respect to risk management and risk
assessment
- to meet separately, from time to time, with management, with
internal auditors, and with independent auditors
- to reveiw with the independent auditor any audit problems or
difficulties and management's response to such issues
- to report regularly to the board of directors
- to evaluate the work of the audit committee annually. Ans: What are
the key audit committee responsibilities?
⫸ Corporate Social Repsonsibility. Ans: refers to the ethical
expectations that society has for business, ethical repsonsibilities are
those things that we ought to, or should do, even if we prefer not to
⫸ sexual harassment, other forms of discrimination, and workplace
safety. Ans: Corporations have an ethical responsibility to prevent
harm such as:
