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

1. Which of the following is correct?

A) A contract is frustrated when something happens, after it has been entered into, which renders the contract impossible to perform.
B) A contract is frustrated if it is impossible to perform at the time that it is made.
C) A contract is frustrated when something happens, after it has been entered into, which renders the contract more difficult to perform.
D) A contract is frustrated when a party expressly agrees to manufacture and supply goods and then discovers that they will be far more expensive to produce than they thought at the time of the contract.

2. Which of the following are included in CIMA's practical proposals for better reporting of corporate governance?
1. The Chief Executive should communicate information regarding the performance of individual directors to the shareholders
2. The company should explain how the information needs of the shareholders have been met during the year
3. The Chairman's views on good governance and the culture of the board should be communicated

A) 1 only
B) 2 and 3 only
C) 1,2 and 3
D) 1 and 2 only

3. T, a Sales Representative of E plc, made an appointment to see you in the hope of persuading you to place a substantial order with E plc. During your discussions, T suggested that you could qualify for a cash bonus in the event of an order being placed.
Which of the following is correct?
(i) Placing an order in these circumstances will place you in breach of your employment and professional obligations.
(ii) If the goods are what your company requires and are priced competitively, you are acting correctly in placing an order and qualifying for the cash bonus.
(iii) You have been placed in a conflict of interest situation and you should not proceed to place an order.

A) (ii) only
B) (iii) only
C) (i) and (iii) only
D) (i) only

4. SuperSole eventually decides to outsource its internal audit.
Which of the following are benefits it might experience from doing so?
Select ALL that apply.

A) Less risk of confidential information leaking
B) Readily available expertise
C) Flexibility to increase or reduce in size
D) Lower costs
E) Less time taken
F) More independent auditing process

5. Which of the following statements describes an example of a value for money audit?

A) Identifying and appraising weaknesses in the organisation's management team
B) Appraising the efficiency of one of the organisation's manufacturing processes
C) Assessing the organisation's conformance with employment laws and regulations
D) Analysing the reported financial performance of one of the organisation's branches

Solutions: