Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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Which board committee advises on directors' pay and bonuses?

The Audit Committee
The Remuneration Committee
The Governance Committee
The Risk Committee

The correct answer is: The Remuneration Committee

The Remuneration Committee is responsible for advising on directors' pay and bonuses. This committee plays a vital role in determining the compensation structure for the company’s executives and ensuring that the pay reflects the performance and strategic objectives of the organization. It also addresses issues related to pay equity and aligns the interests of the directors with those of shareholders. Other committees listed, such as the Audit Committee, focus on financial reporting and compliance, examining the integrity of financial statements. The Governance Committee typically oversees the corporate governance policies and practices, ensuring that the board adheres to best practices. Meanwhile, the Risk Committee is dedicated to overseeing risk management strategies and ensuring that the organization identifies and mitigates risks effectively. Thus, the distinguishing function of the Remuneration Committee is specifically tied to compensation and bonuses, making it the correct choice for this question.