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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. You work for a company that is constructing a major football stadium. The day that the stadium is finished, large cracks appear in the supporting walls. It turns out that your company's purchasing director bought cement from a new and inexperienced company. You find out that the cement supplier was no cheaper than the other suppliers who had bid for the contract but that the son of your purchasing director happens to run the cement company. Is this an ethical issue and why?

A) Yes - your purchasing director has had a conflict of interest in this matter
B) Yes - the cement supplier clearly knew that it was providing faulty materials
C) No - the cement supplier was clearly chosen on the basis of value for money rather than personal connections
D) No - there is no evidence to show that the company knew that the cement was faulty

3. Company A has recently been having problems matching the views of its employees to its own. Which of the following might help their situation? Select ALL that apply.

A) Only hire those who share the company's views.
B) Reward those who consistently recognise and and adhere to the company's values.
C) Change its views so that it matches each of their employees.
D) Ensure management level employees follow the actions and behaviour of those higher up.
E) Teach employees the company's values and train them to follow them.
F) Discipline those who regularly ignore the company's rules and values.
G) Threaten legal action against those who regularly ignore the company's ethics.
H) Implement a weekly hour-long session that recaps the company's values. All employees must attend.
I) Remove any barriers that might prevent an employee from adhering to the company's ethics.

4. Which of the following statements is incorrect in relation to written resolutions?

A) Written resolutions may only be passed by private companies.
B) A written resolution is only valid when it has been signed by all those who were entitled to attend and vote at company meetings.
C) A written resolution can be used in place of an ordinary or special resolution.
D) In most cases, a written resolution may be used instead of holding a general meeting.

5. Miss K is a newly qualified accountant working in a highly respected local accountancy firm headed by Mr R, who is a pillar of the community. One night, Miss K is at an out of town bar with friends, when she spots Mr R with Mrs E, a client of the firm. It is obvious they are having a secret affair. Is this an ethical issue?

A) Yes, Mr R is involved in a potential conflict of interest by having an affair with a client
B) No, what Mr R and Mrs E do in their own personal time is nobody else's business
C) No, Miss K knows nothing about Mr R's private life, and may be mistaken about the affair
D) Yes, as professional accountants, Miss K and Mr R should not be drinking alcohol

Solutions: