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

1. Company B wants to implement ethical control over its staff. It wants to do this by implementing a strong organisational culture.
Which of the following are ways in which the organisation could exercise control in regards to its organisational culture?
Select ALL that apply.

A) Ensure that the company's organisational systems encourage adherence to its ethics.
B) Ensure that disciplinary action is taken when the company's ethical code is broken.
C) Introduce a statement of values which outlines what the organisation stands for.
D) Ensure the company's ethical expectations are thoroughly communicated.
E) Only employ directors who have proven strong moral values.
F) Ensure that the company's chairman and CEO lead by example.

2. Immediately before being placed in creditors voluntary liquidation, Tom, the sole director of Bee Ltd, arranged for the company to make an early repayment of an unsecured loan made to Bee Ltd by his wife Anne. Which of the following is correct?

A) The company has acted in breach of fiduciary duty and can be made liable up to the amount of the loan.
B) The company has given a "preference" to Anne, and the court may make any order it thinks fit to restore the position to what it was before Anne was repaid.
C) The company has entered into a "transaction at an undervalue" with Anne, and the court may fine or imprison Tom.
D) The transaction amounts to "wrongful trading" and Tom may be held personally liable up to the amount of the loan.

3. In assessing a compensation award for unfair dismissal, which of the following is incorrect?

A) A basic award is calculated related to the alleged employee's conduct and circumstances of the case.
B) A compensatory award may additionally be made.
C) The award may be reduced if the employee's conduct contributed to the dismissal.
D) Any award is subject to the statutory minimum sum identified.

4. C recently purchased some goods at an auction sale. Which of the following is correct?
(i) The contract was concluded by the fall of the Auctioneer's hammer.
(ii) The Auctioneer's call for bids was an invitation to treat.
(iii) Once the bidding had started, the Auctioneer was unable to withdraw the goods from the sale.

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

5. According to the UK Corporate Governance Code, who is responsible for setting the company's values and standards?

A) The Board
B) The shareholders
C) The Managing Director
D) The Chairman

Solutions: