CIMA BA4 Based on Real Exam Environment

Fundamentals of Ethics, Corporate Governance and Business Law Questions and Answers

Question 25

T, a Sales Representative of E plc, made an appointment to see you in the hope of persuading you to place a substantial order with E plc. During your discussions, T suggested that you could qualify for a cash bonus in the event of an order being placed.

Which of the following is correct?

(i) Placing an order in these circumstances will place you in breach of your employment and professional obligations.

(ii) If the goods are what your company requires and are priced competitively, you are acting correctly in placing an order and qualifying for the cash bonus.

(iii) You have been placed in a conflict of interest situation and you should not proceed to place an order.

Options:

(i) only

(i) and (iii) only

(ii) only

(iii) only

Question 26

The majority of developed countries require publicly quoted companies and large companies to produce annual financial statements which are then audited by an external auditor.

Which of the following statements regarding the requirement for external audit is Incorrect?

Options:

Independent external audit gives confidence in the financial statements which is required as the directors have incentives to manipulate the financial statements presented to the shareholders

As the directors are responsible for the day-to-day management of the company, they hold more detailed information which is resolved by the presentation of financial statements to the shareholders and this needs to be guaranteed by independent external audit.

Independent external audit gives confidence in the financial statements by including the auditor's opinion on whether or not they show a true and fair view.

As the directors are responsible for the day-to-day management of the company, they hold more detailed information which is resolved by the presentation of financial statements to the shareholders and there is a need for this to be assured by independent external audit

Question 27

There are several different schools of ethics. Which of the following best represents the ethical approach adopted by the accountancy profession?

Options:

People have a duty to comply with a set of universal principles that apply irrespective of the consequences of their actions

The guiding principle of conduct should be the greatest happiness or benefit of the greatest number.

People should act in their own best interests and an action is only right if it benefits the individual undertaking that action

Virtues such as charity and justice are dispositions to act in ways that benefit both the person possessing them, and society as a whole

Question 28

Which of the following is one of the fundamental principles identified in the CIMA Code of Ethics?

Options:

Professional conscience and due care

Professional consideration and due care

Professional cooperation and due care

Professional competence and due care

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CIMA BA4 Based on Real Exam Environment

Fundamentals of Ethics, Corporate Governance and Business Law Questions and Answers

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