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

1. Company B wants to implement ethical control over its staff. It wants to do this by implementing a strong organisational culture.
Which of the following are ways in which the organisation could exercise control in regards to its organisational culture?
Select ALL that apply.

A) Only employ directors who have proven strong moral values.
B) Ensure that the company's organisational systems encourage adherence to its ethics.
C) Introduce a statement of values which outlines what the organisation stands for.
D) Ensure the company's ethical expectations are thoroughly communicated.
E) Ensure that disciplinary action is taken when the company's ethical code is broken.
F) Ensure that the company's chairman and CEO lead by example.

2. Which of the following is the responsibility of the Chairman, according to the UK Corporate Governance Code?

A) Authorizing major investments
B) Setting the agenda for Board meetings
C) Operational control
D) Carrying out the policies of the Board

3. C has just set up her own practice and things are going well. She is also a single parent, so is reliant upon her income to pay her bills and support her family. One of her uncles recommends a new client to her.
This client wants C to provide an accountant's report in support of his mortgage application. He insists there is no need for her to see the full details of his income. He suggests that C's uncle would be most displeased if she did not help him, and that she may potentially lose other potential clients.
This is a tension between C's:

A) Personal and Societal values
B) Societal and Professional values
C) Corporate and Professional values
D) Personal and Professional values

4. In the event of the directors of a company limited by shares ignoring a provision in its Articles of Association which is for the benefit of the shareholders, which of the following is correct?

A) Individual shareholders may sue the directors for breach of contract.
B) Individual shareholders have no remedy against the company.
C) The shareholders as a whole may sue the directors for breach of contract.
D) Any or all of the shareholders may sue the company for breach of contract.

5. Which of the following is incorrect?

A) An agreement is not binding in English law unless it is supported by consideration or contained in a deed.
B) A person must know of an offer before he can accept it.
C) An acceptance is ineffective unless it is communicated to the offeror by the offeree personally.
D) An invitation to treat is a call to start negotiations.

Solutions: