Fundamentals of ethics, corporate governance and business

Which of the following is not a recommendation of the UK Corporate Governance Code?. Only persons who have industrial experience should be recruited as non-executive directors. The board should be subject to formal annual evaluation of performance. All directors should receive induction. The board should use the AGM to communicate with investors and encourage their participation.

In which one of the following instances will misrepresentation generally not be recognised. The contract contains half-truths. In a contract of the utmost good faith, full disclosure is not made. Information ceases to be accurate because of changed circumstances. A party fails to disclose material facts.

Which of the following describes the aim of corporate governance?. To ensure that companies are well run in the interests of their shareholders and the wider community. To ensure the wealth of companies contributes to the health of the economies where their shares are traded. To ensure that companies have a positive impact on the environment, stakeholders and the wider society. None of the above.

The following advertisement appeared in a farming magazine. "Plough for sale. Little used, very good condition £1000." How does this statement be defined at law?. Advertising puff. Offer to sell. Invitation to treat. Invitation to buy.

An offer was made by A to sell goods on the 1st April for £2000. B the offeree telephoned A on the 5th April offering to pay £1800 for the goods. On the 8th April, A offered to sell the goods to C for £1900, and C accepted this offer on the same day. On the 7th April, B sent a letter to A which was received on the 10th April agreeing to pay the £2000, the asked price for the goods. There is a contract between A and B created on the 7th April. There is a contract between A and B created on the 10th April. There is a contract between A and C. There is no contract created.

A coat was displayed in a shop window with a price tag attached which read £10. The price tag should have read £100. X who saw this went into the shop and demanded the coat for£10. Which one of the following is correct?. As the window display is an offer, X can demand the coat at £10. The window display is merely an invitation to treat and the shopkeeper does not have to sell the coat to X. The shopkeeper can refuse to sell the coat for £10, but cannot refuse to sell the coat to X for £100 if X was prepared to pay this sum. The shopkeeper would be bound to sell the coat to any customer prepared to pay this £100.

Which of the following statement/s is/are correct 1. A contract term can be implied by statute 2. A contract term can be implied by a court on the basis of trade custom. 1 only. 2 only. Both 1 and 2. Neither 1 or 2.

Which one of the following statements is correct?. In a contract, a breach of a condition will result in the contract being terminated. In a contract, a breach of a condition is a breach of a term of fundamental importance to the contract. In a contract, a breach of warranty entitles the injured party to terminate the contract. In a contract, a breach of warranty can terminate a contract, but only on the basis of equity.

Which of the following statement/s is/are correct 1. A limited liability partnership has legal personality 2. Individual members of a limited liability partnership will have contractual liability to creditors of the partnership. 1 only. 2 only. Both 1 and 2. Neither 1 or 2.

To which type of company is the UK Governance Code primarily directed. All companies. All public companies. All private and public companies. All listed public companies.

Which of the following is not a recommendation of the UK Corporate Governance Code?. A board audit committee should be established. The role of Chairman and Managing Director should be combined. At least one-half of the board should be made up of independent non-executive directors. All directors should attend the AGM.

The two-tier board structure comprises a Supervisory Board and what other organ?. A board representing the employees. A board majority of non-executive directors. An all-exclusive board. A managing board.

Which of the following is not an accurate description of what a company's code of ethics is likely to achieve. It tells employees what is expected of them in terms of behaviour. It explains the approach and outlook of the organisation. It encourages employees to take a consistent approach to ethical issues. It eliminates the need for legislation.

Which of the following actions by a company would not encourage employees to speak up if they encounter potential serious cases of unprofessional or unethical behaviour?. Introduce an employee helpline for ethics-related queries. State in the company's code of ethics that employees have a duty to speak up. Stress the importance of employees working together to meet ambitious sales targets. Develop a culture where it is safe and acceptable for employees to raise concerns.

Which of the following does not specifically relate to business ethics. The financial viability of a business. The behaviour of the business and its employees. How a business conducts its relationship with its stakeholders. How a company does business, rather than what it does.

Which of the following is not one of the five personal qualities that CIMA expects of it's members. Reliability. Respect. Responsibility. Reflection.

While reviewing the work of one of your colleagues, you discover that he has made some extremely serious mistakes. When you discuss this with him, it becomes clear that he does not have the understanding of financial matters that he requires to be a competent accountant. This violates CIMA's fundamental principle of: Integrity. Objectivity. Professional competence and due care. Confidentiality.

Where a transaction has been completely missed out from the ledger account what is this known as?. Error of principle. Error of commission. Error of omission. None of the above.

You are working abroad and find yourself in a situation where a particular element of the country's legislation is in conflict with the IFAC Code of Ethics. In this situation, you should: Obey the law because it is mandatory to comply with legislation. Obey the ethics code because it is internationally binding. Obey the law because you have a public duty to uphold the law, but not to uphold the ethics. Obey the ethics code because it is a requirement of your profession.

Which of the following relates specifically to accountability. Taking responsibility for one's work and conclusions. Maintaining clear records that provide evidence to back up conclusions. Being answerable to queries in relation to one's work. All of the above.

Which of the following relates to an ethical issue?. Moving into a larger office as part of a plan to expand your business. Introducing a new monthly reporting process to maximise efficiency. Introducing a new IT system to ensure confidentiality of customer information. Recruiting a new finance director.

Which of the following would be of the least help in developing an effective corporate ethics programme?. Having a chairman and chief executive who champion ethics at every opportunity. Providing copies of the company's code of ethics to trusted personnel only to avoid the document falling into the hands of competitors. Incorporating ethical issues into new employee induction programmes. Talking to the company's key stakeholders about the social and environmental issues they believe to be important.

Which of the following correctly states the composition of an audit committee?. Executive directors only. Non-executive directors only. Executive directors and internal auditors. Non-executive directors and internal auditors.

In tackling ethical dilemmas, which of the following would not help you to find a solution?. Establishing the facts and the ethical issues involved. Referring to the CIMA and /or your company's code of ethics. Following an established internal procedure. Choosing to postpone tackling the issue due to pressure of deadlines.

One of your colleagues has just been passed over for promotion for the third time. She shows you evidence that only a small number of women have ever been promoted to positions of seniority within your company. This, she says, is an issue of : Harassment. Discrimination. Conflict of interest. Bribery and corruption.

Which of the following is not an ethical issue for a bank?. Providing accurate information about terms and conditions when advertising interest rates for customer loans. Launching a premium account service for customers who are willing to pay a monthly charge for improved service. Money laundering. Disabled access to the bank branches.

Which of the following ethical issues is most likely to be affected by new developments in information technology. Data protection. Gifts and hospitality. Harassment. Health and safety.

In contract law, a misrepresentation is which one of the following?. An untrue statement of fact or opinion which induces another to contract. An untrue statement of fact, opinion or intention which induces another to contract. An untrue statement of fact which induces another to contract. An untrue statement of fact or intention which induces another to contract.

When deciding on whether a solution to an ethical dilemma is appropriate, which of the following questions is irrelevant. Do I feel comfortable about others knowing about my decision?. Have I considered all parties who may be affected by my decision?. Would a reasonable third party consider my decision fair?. Is this the most appropriate decision considering my career aspirations?.

Which of the following board has members which are elected by shareholders at the annual general meeting?. Managing board only. Supervisory board only. Both the management and supervisory board. Neither the management or supervisory board.

What is the objective of an external audit. To protect the interests of minority shareholders. To detect fraud and other irregularities. To assess the effectiveness of the company's performance. To provide assurance on the directors' assertions about the financial statements.

Which of the following correctly describes the composition of a unitary board. Executive directors only. Non-executive directors only. Both executive and non-executive directors. Non-executive directors and internal auditors.

Which of the following is incorrect in relation to the Sarbanes-Oxley Act ('the Act'). The Act created the Public Company Accounting Oversight Board ('PCAOB'). The Act requires all US listed companies to have an audit committee. The Act restricts the additional services that an auditor can provide to an audit client. The Act requires directors to be professionally qualified to act as directors of public companies.

Who is ultimately responsible for ensuring that the financial statements are prepared in accordance with relevant legislation?. The external auditors. The internal auditors. The board of directors. The shareholders.

In relation to the UK Corporate Governance Code which of the following statements is correct. The Code contains principles which, if broken, may give rise to civil liability only. The Code contains principles which, if broken, are punishable by relatively small fines. The Code contains principles which, if broken, only oblige the board to disclose the reasons for the breach. The Code contains principles which, if broken, have no consequences whatsoever.

Which one of the following statements is incorrect in relation to the interaction of corporate governance with business ethics and company law?. Corporate governance is primarily concerned with the effective control business efficacy and accountability of the management of public listed companies. Corporate governance does not affect private companies. Corporate governance business ethics and company law are made up of entirely separate principles. The term 'stakeholders' is wider than shareholders and employees.

Which of the following is not a principle of the OECD framework of governance?. Disclosure and transparency. Innovation and adaptability. Responsibilities of the board. Shareholders' rights of ownership.

Which of the following error/s would affect calculation of profit? 1. Error of commission 2. Error of principle. 1 only. 2 only. Both 1 and 2. Neither 1 or 2.

What is ethical conduct for a CIMA accountant?. Doing what you think is right for the society. Thinking that what you are doing is socially right. Thinking about the social consequences of what you do before you do it. Doing things that you believe comply with the CIMA Code.

What is detection risk?. That the company's control system will fail to detect and correct material errors in the processing of transactions. That the auditor's procedures will not detect material errors which exist in the financial statements. The susceptibility of financial statement transactions and balances to material errors which may or may not be detected. None of the above.

Which of the following is a correct statement about CIMA's Code of Ethics?. It covers all ethical eventualities. It covers unusual situations in practice which are unlikely to give rise to ethical problems. It gives the general principles to guide behaviour, rather than any specific guidance on how to act in particular circumstances. It can only be understood if read in conjunction with the IFAC Code.

Which of these is correct? The importance of the ethical rule is to be judged by the: cost of breach to the individual bound by that rule. social consequences for breach of the rule. impact on the profession of the rule. the context within which it is applied.

Which of these is not a fundamental ethical principle?. Integrity. Objectivity. Professional competence and due care. Independence.

A project that your manager is keen on looks set to have problems showing a profit in the first year. Thereafter, it is projected to make a healthy margin. You are aware of the way in which the system has gaps, which could hide the weak performance in the first year and could be disguised, and your manager asks you what they are and whether you can implement them. Do you: Tell him that the company system do not permit any variance from the accounting method that would show up the weakness. Say that you know how to help him, but you can't because you don't think it's right to give false information?. Prepare the financial reports in the way he requests, but get him to send you an email confirming he asked you for this unrepresentative report?. Do what he says, because he's the client.

Which of the following is not one of the personal qualities and virtues specifically sought by CIMA?. Courtesy. Timeliness. Respect. Selflessness.

Which of the following statement/s is/are correct in relation to CIMA's proposals for better corporate governance? 1. There should be more disclosure 2. There should be better disclosure 3. Disclosure should be adapted to the circumstances of the company. 1 and 2. 1 and 3. 2 and 3. 3 only.

Your employer is having liquidity problems and has reached its overdraft limit. The finance director has asked you to review the company's accounting policies to see if a change could improve the presentation of the financial accounts, which are supplied on a monthly basis to the bank. From the ethical perspective, what is the most appropriate action for you to take?. Seek advice from your professional body. Do as requested and seek advice afterwards. Do as requested. Go off sick.

Which of the following is not one of the Seven Principles of Public Life issued by the Committee on Standards in Public Life?. Courtesy. Openness. Integrity. Leadership.

Why should an accountant continually develop?. Because management accounting changes so fast that you need to keep up with it to stay marketable for employment. Because continual development means that the client always gets a better service every time he or she uses your services. Because professional competence rests on checking what you do know, adding to knowledge and skills and challenging habitual working practices. Because management accounting needs to reflect the evolving climate in business and finance.

You believe that one of your colleagues has knowingly provided misleading information. If your belief is true, which of CIMA's fundamental principles has your colleague breached?. Professional competence and due care. Integrity. Objectivity. Confidentiality.

Which of these is a good indicator of accountability?. Having regular reviews with your line manager to explain how you are working. Keeping accurate records in an orderly way. Always explaining your decisions when you make them. Being an able accountant.

Which is the best explanation of social responsibility?. Social responsibility means the accountant is responsible to all of society equally. Social responsibility means that the accountant should do additional things to support social initiatives. Social responsibility means that the accountant has to be squeaky clean in his or her social as well as professional life. Social responsibility means that the accountant should always be aware of the broader social consequences of his actions.

In relation to a value for money audit, which term does the following statement define? 'Achievement of objectives'. Economy. Efficiency. Effectiveness. Efficacy.

An accountant who answers accusations that their work has failed to meet professional standards demonstrates which concept?. Accountability. Reliability. Social responsibility. Independence.

Which of the following is not a board committee?. Audit committee. Remuneration committee. Nomination committee. Corporate social responsibility committee.

Which is a correct statement?. The IFAC Codes of conduct deal with accountants working internationally, while CIMA only applies to business done in Britain. The CIMA Code is inferior to IFAC's Code. The IFAC Code reflects the standards laid down by CIMA. The IFAC Code is reflected in the CIMA Code.

Which of the following is not an advantage of a company limited by shares?. The company is liable on its own contracts. The member's liability is limited to the amount he agreed to pay for his shares. The company is not affected by any change in members. There are less disclosure requirements than for a sole trader.

Why do we need codes of professional ethics. To resolve disputes. To punish bad accountants. To protect the reputation of the profession. To improve the quality of the service to the public.

Which statement is the most accurate of the statements?. Laws can never be broken, even if they breach ethics. Ethical breaches always have to be justified, even if they result from the breach of of a law. Legal breaches often result in ethical breaches. Ethical breaches often result in legal breaches.

The articles of association are a contract between: The company and its members. The company and its stakeholders. The company and third parties. None of the above.

Which of the following statements most accurately expresses different approaches to ethical regulations?. Breaches of ethics have less serious consequences than breaches of the criminal law. Ethical frameworks let the individual decide about how they should act in particular situations. Regulations provides a ' thou shall not' approach to behaviour, whereas framework approaches encourage positive behaviour in support of ethical conduct. The framework approach is best suited to practical problem-solving in ethics.

How does the framework-based approach ro ethics differ from the rules-based approach?. The framework-based approach uses legal language. The framework-based approach requires a detailed rule book. The framework-based approach sets out rules covering all eventualities. The framework-based approach sets out general guidelines.

Which of the following would not need to be provided to form a company. The proposed name of the company. The type of company. The proposed start date of trading. Details of the registered office.

What is meant by by the expression 'lifting the veil of incorporation' ?. The company is treated as if it were fully liable for all its debts. The shareholders are treated as though they were carrying on business in partnership. The directors are treated as partners and are fully liable for the company's debts. The company is treated as if it were not a separate person at law.

Which of the following is not a type of stakeholder?. Associated. Internal. Connected. External.

In which one of the following instances will it be deemed to be an automatic unfair dismissal?. Where an employee brings a court action against the employer in food faith to enforce a statutory right, where no right in fact exists. Where an employee is selected for redundancy contrary to an agreed arrangement of custom, without good reason. Where an employee fails to comply with orders on the basis of valid health and safety grounds. Where an employee is pregnant.

Which of the following uses a rules-based approach to corporate governance? 1. King III 2. UK Corporate Governance Code 3. Sarbanes-Oxley. 1 and 2. 2 and 3. 1 and 3. 3 only.

Where a dismissed employee claims wrongful dismissal, which of the following statement/s is/are correct? 1. The claim can be based on dismissal without proper notice 2. The claim will essentially be for breach of contract. 1 only. 2 only. Both 1 and 2. Neither 1 or 2.

Employers owe certain implied duties to employees. In which of the following instances, does a duty to provide work not exist?. Where the employee's remuneration depends upon the work done. Where the employee needs work to maintain reputation. Where the employee needs work to maintain familiarity with technical change. Where the employee is participating in an ongoing staff training programme.

In which country was King III introduced. UK. USA. South Africa. Canada.

Which of the following is invalid consideration? 1. A promise to perform an existing contractual obligation 2. A promise to perform an existing statutory obligation. 1 only. 2 only. Both 1 and 2. Neither 1 or 2.

Which of the following focused on directors' remuneration in the UK. Hampel report. Turnbull report. Greenburry report. Tyson report.

Ria writes to Sarah offering to buy Sarah's boat for £500. In her letter, she writes 'If I don't hear from you, I shall consider it mine and pick it up on Friday'. Which of the following best describes the legal position as to whether or not a contract exists?. There is a contract because Ria waived the need for acceptance. There is a contract because Sarah complied with Ria's terms exactly. There is a contract because acceptance can be inferred from Sarah's conduct. There is no contract because there is no positive act to indicate acceptance.

Which of the following constitute misrepresentation. Failure to disclose full material facts. Failure to communicate changed circumstances. Failure to communicate fully relevant information, although that which is communicated is accurate. All of the above.

Which of the following statement/s is/are correct? 1. An external audit report has a formal reporting structure 2. An internal audit report has a formal reporting structure. 1 only. 2 only. Both 1 and 2. Neither 1 or 2.

Which one of the following is incorrect?. A condition is a term that the parties intended to be of fundamental importance. A warranty is a term that the parties did not intend to be of fundamental importance. If a condition is breached, the contract is automatically terminated. If a warranty is breached, the innocent party cannot treat the contract as discharged.

In relation to whistleblowing to whom can a disclosure only be made in extreme circumstances?. Legal adviser. Government minister. Media. Internal department.

Which of the following is not an advantage of a company outsourcing its internal audit function?. There will always be a reduction in costs. Provides access to to special skills. Can provide access to an internal audit team immediately. Reduced management time in administering an inhouse department.

If you are offered an expensive gift from a client which threat arises. Intimidation. Advocacy. Self-review. Self-interest.

Which of the following is correct in relation to a company limited by shares. A company has management of the company separate from ownership. A company does not have perpetual succession. A private company is not a separate legal person distinct from its shareholders. None of the above.

Which of the following business organisation is appropriate for a high-risk business?. Sole trader. General partnership. A company limited by shares. None of the above.

Which of the following is/are an element of audit risk? 1. The risk that the financial statements contain a material misstatement 2. The risk that the auditor fails to detect any misstatement. 1 only. 2 only. Both 1 and 2. Neither 1 or 2.

Which of the the following statement/s is/are correct? 1. A company may enter into any contract in its own name 2. A company has restrictions on its business purpose. 1 only. 2 only. Both 1 and 2. Neither 1 or 2.

Which of the following statement/s regarding off-the-shelf companies is/are correct? 1. They may be cheaper and simpler than incorporating a new company 2. They cannot enter into contracts immediately. 1 only. 2 only. Both 1 and 2. Neither 1 or 2.

Which of the following should be included in an audit engagement letter? 1. Objective and scope of the audit 2. Results of previous audits 3. Management's responsibilities. 1 and 2. 1 and 3. 2 and 3. 2 only.