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

1. The chief executive of a transnational corporation states on her curriculum vitae that she has an MBA which she does not in fact have. Is this an ethical issue and why?

A) Maybe - depending on whether the lack of an MBA would mean that she is not competent to do her job
B) No - everyone lies on their CV
C) Yes - lying is an ethical issue and casts doubt on the integrity of the individual
D) Maybe - depending on whether anyone finds out or not

2. Timmy has just taken over as the managing director of a well-known manufacturing company.
He really wants to do a good job an ensure that the company maintains its positive reputation.
Baring in mind the five key principles of corporate governance, which of the following should Timmy do to ensure he does a good job?
Select ALL that apply.

A) Ensure the company discloses financial information only during its annual report.
B) Ensure that the company's board is as small as possible - a big board makes the decision-making process far too complicated.
C) Ensure the company discloses both financial and non-financial information during its annual report.
D) Ensure that the company's board are all experienced and knowledgable about the company and the manufacturing industry.
E) Ensure that she duly holds AGMs so that any relevant issues can be discussed.
F) Ensure that an AGM is held during each financial quarter so that any issues that have risen during the last three months are brought to attention.

3. Miss K is a newly qualified accountant working in a highly respected local accountancy firm headed by Mr R, who is a pillar of the community. One night, Miss K is at an out of town bar with friends, when she spots Mr R with Mrs E, a client of the firm. It is obvious they are having a secret affair. Is this an ethical issue?

A) No, Miss K knows nothing about Mr R's private life, and may be mistaken about the affair
B) Yes, Mr R is involved in a potential conflict of interest by having an affair with a client
C) No, what Mr R and Mrs E do in their own personal time is nobody else's business
D) Yes, as professional accountants, Miss K and Mr R should not be drinking alcohol

4. 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) 1 month
B) 14 days
C) 21 days
D) 7 days

5. Stefan takes his car to the local Car wash to get it cleaned. However, when he comes back an hour later, he finds that, although the car has been cleaned, the car has also been damaged, with scratch marks running down all of the left side.
What type of term applied to this situation:

A) Innominate term
B) Warranty
C) Condition
D) Incorporated term
E) Express Term
F) Statutory Implied Term
G) Court Implied Term

Solutions: