BA4 CIMA Fundamentals of Ethics, Corporate Governance and Business Law exact Exam Questions

Fundamentals of Ethics, Corporate Governance and Business Law

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Question # 181

M wrote to A (Accountants), asking if he could rely on the firm ' s audit report of B Ltd. M told A (Accountants), confidentially, that he was considering making a take-over bid for B Ltd. A (Accountants) advised M that he could rely on the report. As a result, M relied on the report and purchased the entire share capital of B Ltd. M has now discovered that he has paid considerably more for the shares than they were worth, as the company ' s stock had been negligently over-valued in the audit report.

Which of the following is correct?

M cannot recover compensation from A (Accountants) in tort, as they only owe a contractual duty to B Ltd.

M can sue A (Accountants) in the tort of negligence as they knew that M intended to rely on their report and the purpose for which he intended to use it.

M cannot hold A (Accountants) responsible, as he did not pay for their advice.

M can recover damages from A (Accountants) for breach of contract.

Question # 182

Demonstrating politeness and good manners towards others reflects the personal quality identified by the CIMA Code of Ethics as:

Correctness

Cohesion

Creativity

Courtesy

Question # 183

In which THREE of the following situations might professional accountants be required or permitted to disclose confidential information relating to their employer?

When directly asked for information by a potential investor in the business

When wishing to discuss an ethical problem with friends and colleagues from outside the organization

Where production of documents is required in the course of legal proceedings

Where disclosure is permitted by law, and authorized by the employer

To comply with the quality review of a professional body

Question # 184

Which TWO of the following are examples of safeguards that may increase the likelihood of identifying or deterring unethical behavior?

Effective, well publicized complaints systems operating by the employing organization, the profession or a regulator

A company policy stating that ethics is discretionary and it is for individuals to decide on their standards of behavior

An explicitly stated duty to report breaches of ethical requirements

Leadership of an organization that establishes the expectation that members of an assurance team will act solely in their employer ' s interest

Question # 185

Which of the following is INCORRECT in relation to the European Commission?

The Commission is the executive arm of the European Union.

The Commission is made of independent Commissioners whose role is to further the interests of the Member States which they represent.

The Commission represents the European Union in any trade negotiations with states which are not members of the European Union.

The Commission has a duty to ensure the treaties and law are upheld, potentially by taking Member States or other institutions to the European Court of Justice.

Question # 186

Which of the following statements is correct in relation to private and public companies limited by shares?

A private and public company are required to hold an AGM

A public company cannot commence trading until it has satisfied minimum share capital requirements

A public company is required to have at least one director

A private company must have a qualified company secretary

Question # 187

GHI Ltd has contracted with JKL Ltd. If JKL Ltd acts in breach of a condition, which of the following is correct?

GHI Ltd may terminate the contract and sue for damages.

GHI Ltd may terminate the contract but cannot also claim damages.

The contract between GHI Ltd and JKL Ltd is automatically terminated.

GHI Ltd is entitled to damages only

Question # 188

Tom is a director of XYZ Ltd. The company is considering purchasing Tom ' s business for £200,000. Which of the following is incorrect?

Tom cannot contract with XYZ Ltd as he would be placing himself in a conflict of interest and duty situation.

Tom must formally disclose his interest in the contract to the board.

The shareholders may approve the arrangement by passing an ordinary resolution.

The purchase consideration may be in the form of cash or shares.

Question # 189

What has been the root of the majority of recent corporate scandals?

Misapplication or ignoring of ethical values

Misapplication or ignoring of accounting principles

Misapplication or ignoring of regulations

Misapplication or ignoring of human rights

Question # 190

Internal audit is considered best practice but is not required by law Which of the following does NOT describe a benefit of internal audit to the board of directors?

The internal audit function can help the audit committee have confidence in the fraud prevention systems within the company

The internal audit function can provide independent assurance of the financial policies applied to the financial statements

The internal audit function can report back to the audit committee if controls are not as effective as they should be

The internal audit function can help the audit committee to discharge their responsibilities for the ongoing monitoring of the risk in the company

Question # 191

Bill is conducting an audit on a furniture manufacturer. There doesn ' t appear to be any major issues with the company and its finances. However, Bill has noticed that the company has adopted a new set of accounting

standards unusually early.

What should Bill do?

Document this finding in an ' emphasis of matter ' statement

Issue a modified audit report as he is satisfied the elements examined.

Issue a modified audit report as he is unsatisfied with the elements examined.

Issue an adverse opinion due to concerns raised during the audit.

Question # 192

How many fundamental principles are identified by the CIMA Code of Ethics?

Three

Four

Five

Six

Question # 193

Danny holds 1%, Edward 2% and Fozia 3% of the issued share capital of Vee Ltd. Which of these shareholders, acting alone or together, hold the minimum percentage to entitle them to require the company to circulate a written statement of their views to all those entitled to receive notice of the forthcoming annual general meeting?

Fozia alone.

Danny and Edward.

Edward and Fozia.

Danny and Fozia.

Question # 194

B Ltd has an issued share capital of 1,000 ordinary £1 shares. The board of B Ltd has resolved to alter the company ' s articles of association. Which of the following is correct?

(i) The articles may be altered by board resolution.

(ii) The articles may be altered by a written resolution of the shareholders.

(iii) The articles may be altered by a special resolution of the directors.

(i) only

(ii) only

(iii) only

(ii) and (iii) only