Yolanda, a ballroom dance instructor, was recently asked to be a director of ABC Company which is publicly traded. She is very honored and excited. Her friend, Joe, asked her if she had any experience in accounting, business, or SEC requirements. Yolanda told him no, but that the president of ABC had assured her that the only responsibility of a director was acting as a figurehead because the
officers took care of all detailed corporate business. Yolanda says that she is accepting the position because it will get her exposure in the community and perhaps increase her dance clientele. Is Yolanda correct regarding her responsibilities, and why or why not?
a. Yes, Yolanda is correct that the primary job of a director is to serve as a figurehead.
b. Yolanda is correct that the primary job of an outside bank director is to serve as a figurehead, but that is not true of inside directors.
c. Yolanda is not entirely correct, but she has no affirmative responsibility to ensure the accuracy of any reports because that is entirely the responsibility of officers of the corporation.
d. Yolanda is incorrect, and the SEC emphasizes the responsibility of directors to ensure the accuracy and completeness of public company filings with the SEC.
d
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Effective internal control requires a department to purchase supplies on its own
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