CIMA BA4 Exam : Fundamentals of Ethics - Corporate Governance and Business Law

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CIMA BA4 Exam Syllabus Topics:

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

Question 1

Corporate governance codes may either be rules-based or principles-based Which of the following statements correctly describes a rules-based approach to corporate governance?

A. A rules-based approach instils the code into law but encourages compliance with the spirit of the law.
B. A rules-based approach instils the code into law with appropriate penalties for transgression.
C. A rules-based approach instils the code into law but leaves the sanctions for non-compliance to be decided and enforced by the shareholders.
D. A rules-based approach requires that a company complies with the rules or explains why it has not.

Question 2

SuperSole is a large shoe company that sells its products all over the world. It has many factories and stores in many different countries, and its yearly revenues often exceed £100 million. The company is also listen on the stock exchange.
Should SuperSole have its own internal auditing department?

A. No - Only small companies need an internal auditing department.
B. Yes - Its large size and complexity increases the need for an internal auditing department.
C. No - All companies should be externally audited.
D. Yes - All companies should have their own internal auditing department.

Question 3

Mr X's wife is gravely ill. He accepts money from a client to falsify some accounts. The client is a contractor, being paid by the Government to build a bridge over a river. The accounts now state that more expensive materials were used to build the bridge. The money helps Mr X pay for his wife's medical treatment. Is this an example of a 'victimless crime'?

A. Yes. Mr X needed the money to help his wife - family is more important
B. Yes. Mr X used the money to get help for his wife. The bridge was built anyway
C. Yes. Mr X has a duty to do as his client asked
D. No. The contractor is being paid to build a bridge with tax payers' money. If it is built with poor quality materials it may collapse, wasting money, and potentially causing an accident

Question 4

Which of the following statements is correct?
(i) The written statement of particulars of employment is the contract of employment and every employee with one month's service is entitled to receive a copy.
(ii) The written statement of particulars of employment is not the contract of employment.
(iii) The written statement of particulars of employment may be the best evidence of the terms of the contract and every employee with one month's service is entitled to receive a copy.

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

Question 5

Kane is a management accountant for business in the City. When looking through the company's latest financial reports he finds that company has been paying far less tax than it should be.
After consulting the company's management, Kane discovers that the company had been deliberately paying less tax and are not interested in taking action to rectify it.
As Kane has done all he can to try and solve the issue himself, it's clear that he now needs to take steps to disassociate himself from the misleading information.
How might he do this?
Select ALL that apply.

A. Manipulate the company's accounts so that the right amount of tax is paid.
B. Resign from the company.
C. Determine whether he should report the issue.
D. Destroy all documents that contain information regarding the company's tax avoidance.
E. Consider getting legal advice.

Solutions: