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

1. Zed plc contracted to build an apartment block for Exe Ltd. Which of the following would provide Zed with a valid excuse not to proceed with the contract?
(i) A key employee who was to manage the project has resigned.
(ii) The price of the materials to be used by Zed plc have increased to such an extent that the building can only be completed at a loss to Zed plc.
(iii) Planning permission has been refused.

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

2. The body responsible for reviewing the operations of the accounting profession worldwide is:

A) The Financial Review Board
B) The Financial Reporting Council
C) The Professional Oversight Board for Accountancy
D) The International Federation of Accountants

3. In relation to the Unfair Contract Terms Act 1977, which of the following is correct?
(i) A clause which attempts to exclude liability for death or personal injury caused by negligence is only valid if it is reasonable.
(ii) A clause which attempts to exclude liability for damage to property is void unless it is reasonable.
(iii) The Unfair Contract Terms Act applies to contractual terms and to occupiers' liability.

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

4. Which of the following is INCORRECT in relation to the UK Corporate Governance Code?

A) No director should be involved in deciding his or her own remuneration.
B) All UK companies quoted on the London Stock Exchange have to include a statement of how the company has complied with the main principles set out in the Code.
C) There should be a clear division of responsibilities between the Chairman and the Chief Executive.
D) The board should be made up of a majority of non-executive directors.

5. Ethical dilemmas can arise where there is tension between:

A) Corporate and personal values
B) Societal and professional values
C) Professional and corporate values
D) All of the above

Solutions: