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

1. According to the CIMA code of ethics, if appropriate safeguards cannot be identified to address threats to compliance with fundamental principles, a professional accountant should:

A) Refuse to remain associated with the matter creating the conflict, where possible
B) Identify the situation to superiors before continuing with the professional service involved
C) Proceed unless the situation will involve breaking the law
D) Proceed with necessary caution

2. Which of the following is correct in relation to corporate governance in the UK?
(i) If a listed public company in the UK fails to comply with the UK Corporate Governance Code, the company and the board may be prosecuted by the Financial Services Authority.
(ii) The duties of directors are codified in the Companies Act 2006 and breaches are enforceable by the company.
(iii) The ability of the majority of shareholders to dismiss a director for any reason whatsoever is the main sanction provided by the UK Corporate Governance Code.

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

3. Which of the following statements is correct?
(i) The written statement of particulars of employment is the contract of employment and every employee with one month's service is entitled to receive a copy.
(ii) The written statement of particulars of employment is not the contract of employment.
(iii) The written statement of particulars of employment may be the best evidence of the terms of the contract and every employee with one month's service is entitled to receive a copy.

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

4. Which of the following is incorrect in relation to the remedy of damages?

A) A contract breaker is liable for losses which arise naturally from the breach.
B) Damages will not normally be awarded for the distress caused to the innocent party by the breach.
C) Damages are designed to compensate the innocent party and to punish the contract breaker.
D) A contract breaker is liable for special losses which are within his contemplation.

5. You work for a company that designs and manufactures children's toys. Which of the following is NOT an example of social responsibility that your company might choose to address?

A) The welfare of workers who assemble the company's products
B) Whether the recommended retail price of a particular product provides sufficient margin after the unit cost of production is taken into account
C) The environmental impact of transporting toys from the country of manufacture to the country of sale
D) The use of chemicals in manufacturing

Solutions: