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CIMA Fundamentals of Ethics - Corporate Governance and Business Law Sample Questions:

1. Tom is a director of XYZ Ltd. The company is considering purchasing Tom's business for £200,000. Which of the following is incorrect?

A) Tom must formally disclose his interest in the contract to the board.
B) The shareholders may approve the arrangement by passing an ordinary resolution.
C) Tom cannot contract with XYZ Ltd as he would be placing himself in a conflict of interest and duty situation.
D) The purchase consideration may be in the form of cash or shares.

2. In relation to offers, which of the following statements is correct?

A) An offer to sell goods can be made to the whole world
B) An item displayed in a shop window with a price tag is an offer to sell
C) Goods displayed on a supermarket shelf are deemed to be offers to sell
D) Statements made in early negotiations cannot amount to offers.

3. Intimidation threats to compliance with fundamental principles are described as threats that may occur

A) when a previous judgment needs to be re-evaluated by the professional accountant responsible for that judgment
B) when a professional accountant promotes a position or opinion to the point that subsequent objectivity may be compromised
C) as a result of the financial or other interests of a professional accountant or of an immediate or close family member
D) when a professional accountant may be deterred from acting objectively by threats, actual or perceived

4. In the UK, the body responsible for reviewing the regulatory activities of the professional accountancy bodies is:

A) The Financial Review Board
B) The Professional Oversight Board for Accountancy
C) The Financial Reporting Council
D) The International Federation of Accountants

5. Company A has recently been having problems matching the views of its employees to its own. Which of the following might help their situation? Select ALL that apply.

A) Change its views so that it matches each of their employees.
B) Discipline those who regularly ignore the company's rules and values.
C) Threaten legal action against those who regularly ignore the company's ethics.
D) Remove any barriers that might prevent an employee from adhering to the company's ethics.
E) Only hire those who share the company's views.
F) Teach employees the company's values and train them to follow them.
G) Implement a weekly hour-long session that recaps the company's values. All employees must attend.
H) Reward those who consistently recognise and and adhere to the company's values.
I) Ensure management level employees follow the actions and behaviour of those higher up.

Solutions: