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

1. Andrea is completing an audit on the finance department for a medium-sized company. In her report she makes note of the fact that her audit was severely limited due to her being unable to access many of the department's documents.
Because of this and a number of other things she's discovered whilst conducting her audit, she thinks fraudulent activity might have been taking place within the department.
However, Andrea knows that it is not the business of auditors to seek out fraud.
What should she do?

A) Detail her suspicions in the 'emphasis of matter' section in the audit report.
B) Report her suspicions to the company's senior management.
C) There's nothing she can do - it's not the business of auditors to deal with matters concerning fraud.
D) Issue a disclaimer of opinion.

2. Which of the following does not apply to a private company which is about to declare a dividend?

A) The company's net assets must equal the total of called up share capital plus un-distributable reserves.
B) The company must have accumulated realized profits.
C) The company must take account of accumulated realized losses.
D) There must be profits available for distribution as a dividend.

3. After the enactment of the Companies Act 2006, which of the following is incorrect in relation to a reduction of capital by a private company?

A) It is not necessary for the company's Articles of Association to authorize a reduction
B) The shareholders must pass a special resolution
C) The directors must make a statement as to the company's solvency
D) The reduction must be approved by the court

4. One of your colleagues is running an event to raise money for a local charity. One evening, you see her taking boxes of pens, notepads and post-it notes. When you challenge her, she says that she is taking them for her fundraising and, although she has not asked permission to take them, she is sure the company will not mind. Is this an ethical issue and why?

A) No - it is just stationery and nothing valuable
B) No - the company would undoubtedly not mind her using the stationery for charitable purposes, so there is nothing wrong with her taking it
C) Yes - she is using company property for other purposes without permission
D) Yes - she should not be undertaking charitable initiatives

5. B was employed by CDE Ltd and was dismissed. B claimed unfair dismissal and requested a written statement of reasons for his dismissal. Within what period must CDE Ltd comply with this request?

A) 14 days
B) 7 days
C) 21 days
D) 1 month

Solutions:

Question # 1 Answer: D

Question # 2 Answer: A

Question # 3 Answer: D

Question # 4 Answer: C

Question # 5 Answer: A