Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What is the role of the Nomination Committee in a board?

1. To oversee financial audits

2. To suggest new directors for appointment

3. To assess risk management

4. To establish compliant policies

The correct answer is: To suggest new directors for appointment

The Nomination Committee plays a crucial role in ensuring that a board has the right mix of skills, experience, and diversity among its directors. The primary function of this committee is to identify, evaluate, and recommend candidates for appointment to the board of directors. This involves assessing potential directors' qualifications, experience, and fit with the company’s strategic goals and culture. By suggesting new directors for appointment, the committee contributes to effective governance and the overall functioning of the board. It is responsible for succession planning, ensuring that there are well-qualified candidates available to fill gaps that may arise due to retirements or resignations. Moreover, a robust Nomination Committee helps to ensure that the board remains dynamic and responsive to changing business environments, ultimately supporting the long-term success of the organization. In contrast, other choices pertain to different functions: overseeing financial audits is typically the role of an Audit Committee, assessing risk management is often undertaken by a Risk Committee, and establishing compliant policies generally falls to a Governance or Compliance Committee.