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

1. How can a company help employees make the right decision when faced with a difficult situation?

A) Threaten them with disciplinary procedures
B) Offer guiding values and principles to underpin decision-making
C) Have a strong rules-based culture
D) Give them a rule book

2. Which of the following does NOT describe the responsibilities of the audit committee?

A) The review of the company's financial statements and any interim reports produced. The review of the company's systems of internal controls. The review of the audit report and any management letter provided by the external auditor
B) The discussion with auditors on any significant matters that arose during the audit. The recommendations on the appointment and removal of auditors. The setting of the audit fee in discussion with the auditors.
C) The review of the company's financial statements and any interim reports produced. The review of the structure, size and composition of the board. The review of the company's internal control and risk management system
D) The review of the internal audit programme and significant findings of the auditors. The review of the company's systems of internal control. The review of the company's system to facilitate whistle blowing

3. A, B and C carry on business in a general partnership. A has proved an unsatisfactory partner in that he is continually absent from work for no justifiable reason. B and C wish to expel A from the partnership.
Which of the following is CORRECT?

A) As they constitute the majority B and C may vote to expel A.
B) A can only be expelled if the partnership agreement of A, B and C contains an express expulsion clause.
C) It is always unlawful to expel a partner. If B and C wish to carry on business without A the business will have to be dissolved and re-commenced by B and C.
D) B and C may vote to expel A as the Partnership Act 1890 contains an express provision enabling the majority to expel a partner.

4. Which of the following is correct in relation to financial assistance for the purchase of its own shares provided by a private company?

A) In general the existing prohibition has been removed for private companies
B) Financial assistance is a criminal offence on the part of the company
C) Financial assistance cannot be used where a majority shareholder is retiring
D) The directors may be fined if they allow the company to provide financial assistance

5. Why are the principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior "fundamental"?

A) Because they are the foundations of human rights
B) Because they are the foundations of management accounting
C) Because they are the foundations of reasoning and professional practice
D) Because they are the foundations of corporate responsibility

Solutions: