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

1. In relation to the law of misrepresentation, which of the following statements is incorrect?

A) Misrepresentation renders a contract voidable.
B) A victim of fraudulent misrepresentation may seek rescission and damages.
C) A false statement of fact may give rise to remedies in both contract and tort.
D) Damages are available for innocent misrepresentation under the Misrepresentation Act.

2. P is an accountant working in a business Which of the following circumstances might create a self- interest threat for P in her professional role?

A) The company is being threatened by litigation
B) P is concerned over her employment security
C) P is required to review data after previously being involved in its preparation
D) A client is threatening P's dismissal over a disagreement about the review of accounting policies

3. S is assistant management accountant for a large telecommunications company. S has become aware that the company is offering different levels of discount to different corporate customers. S is concerned that this is unethical, so she mentioned it to the Finance Director during her most recent appraisal. The Director seemed amused at S's concern, and said that such a situation was 'perfectly normal'.
Which ONE of the following would it be appropriate for S to do?

A) Nothing further
B) Ask for confirmation in writing from the Director
C) Ask for advice from the company's external auditors
D) Bring the matter to the attention of the Managing Director
E) Resign
F) Request a further meeting with the Finance Director

4. Which of the following is incorrect?

A) A special resolution is needed to dismiss a director if the Articles of Association provide that he is to be a director for life.
B) A director may be removed from office for any reason by an ordinary resolution.
C) A director who is under threat of removal has the right to speak at the meeting, whether or not he is a member.
D) The company must be given 28 days' notice of a proposed resolution to dismiss a director.

5. Which of the following is NOT one of the main requirements of the UK Corporate Governance Code?

A) The appointment of a senior external auditor to the Board
B) The appointment of independent non-executive directors to the Board
C) The separation of the roles of Chairman and Chief Executive
D) The establishment of an audit committee

Solutions: