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

1. Which of the following describes a principles-based approach to ethical standards in an organisation?
The objective behind the approach is to:

A) prevent ethical non-compliance It focuses on the development and application of individual judgment and standards are implicit
B) prevent ethical non-compliance It motivates through values and its standards are explicit
C) detect ethical non-compliance It focuses on the development of discipline and obedience and its standards are explicit
D) detect ethical non-compliance It motivates through fear and its standards are implicit

2. Exe Ltd was under contract to deliver goods by road to London for Wye Ltd for £2,000. After part of the journey was completed the lorry broke down and Wye Ltd was forced to arrange for Zed Ltd to complete the delivery. Subject to the contract not providing for this situation, which of the following is correct?

A) Exe Ltd is entitled to nothing.
B) Exe Ltd is entitled to the full £2,000.
C) Exe Ltd is entitled to part of the delivery fee.
D) Exe Ltd is entitled to a reasonable sum for the work done.

3. Which of the following may cause a director to be disqualified from acting as a director under the Company Directors Disqualification Act 1986?
(i) Persistent default by the director in complying with the filing requirements under the Companies Acts.
(ii) Causing a company to continue to trade at a time when the director ought to know that insolvency is inevitable.
(iii) Carrying on business with intent to defraud creditors.

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

4. You work for a manufacturing company and are told that one of the line managers made a genuine mistake that led to the discharge of waste material into a local river. Your managing director says that the company cannot afford a large fine and demands that no one reports the waste spillage or mentions it again. Is this an ethical issue and why?

A) No - the leak was a mistake, so this is not an ethical issue
B) Yes - the manager who created the spill has behaved unethically and should be disciplined
C) Yes - but only if the waste causes damage to the local environment
D) Yes - the company has a duty to report something that might breach environmental legislation and could cause environmental damage

5. In furtherance of their duty to promote the success of the company under Section 172 of the Companies Act 2006, the directors are required to take account of amongst others, the company and its members, employees and suppliers.
Which of the following can enforce this duty against the directors?

A) The members
B) The suppliers
C) The employees
D) The company

Solutions: