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

1. Which of the following is incorrect?

A) A private company must have at least two directors.
B) The board usually has the power to appoint a managing director.
C) The first directors of the company are those persons who are named as directors on Form IN01.
D) A board usually reaches its decisions by majority vote.

2. Which of the following is INCORRECT in relation to business names?

A) If a business name is used, the name of the proprietor must be stated on business correspondence and at the premises where the business is carried on.
B) If a business name is used which is the same or very similar to that of an existing business, an action in the tort of passing off may be brought by the existing business.
C) Both public and private companies may use a business name.
D) The business name of a private company limited by shares must end in "Limited" or "Ltd".

3. In which of the following countries are employees represented at board level?
i. Germany.
ii. United States of America
iii. France.

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

4. Which of the following are situations involving conflicts of interest? Select ALL that apply.

A) Tina - A personal accountant who actively tries to build a rapport with her clients, though doesn't engage with them outside working hours.
B) Ben - Regularly works two hours later than he should because his boss constantly gives him large amounts of work to do.
C) Tyrone - Works standard hours, though is usually unable to do any overtime due to family commitments.
D) Nina - Receives a large boxful of chocolate delivered to her house from the chocolate factory she is due to audit
E) Shannon - A department manager at an IT firm who regularly goes out drinking with her team members.

5. Company X has a good CSR record, and ensures that its employees enjoy safe working conditions, reasonable work hours and are paid fairly Company Y is known to employ child laborers in the countries in which it operates, where the practice is not illegal Company X has entered into a point business partnership with Company Y to carry out a specific project. In order to comply with the OECD Guidelines, what best describes Company X's responsibilities?

A) Company X would only have a duty to try to stop Company Y from employing child labour if it was illegal in the countries concerned
B) It should ensure that it does not inadvertently use any of Company Y^s child workers in carrying out its own work on the project
C) Company X does not have any responsibilities, as its own record is good and it is not employing any children
D) It should attempt to persuade Company Y of its ethical responsibilities to stop employing children.

Solutions: