BA4 Practice Exam Questions with Answers Fundamentals of Ethics, Corporate Governance and Business Law Certification

Professional conscience and due care

Professional consideration and due care

Professional cooperation and due care

Professional competence and due care

a gift from a client is accepted

the competitive fee quoted did not recognize the complexity of the assignment

the auditor accepts a referral of a new client from an existing client

a professional accountant in public practice solicits new work through advertising or other forms of marketing

Loss of reputation

Loss of earnings

Loss of job

Loss of life

A public company which provides a loan to one of its directors commits a criminal offence unless the loan is approved by the shareholders

If a public company pays the debts of one of its directors on terms that the payment must be repaid by the director, the shareholders must approve the payment

A public company cannot make loans to its directors

A public company is not subject to any restrictions when making a loan to one of its directors

As they constitute the majority B and C may vote to expel A.

A can only be expelled if the partnership agreement of A, B and C contains an express expulsion clause.

B and C may vote to expel A as the Partnership Act 1890 contains an express provision enabling the majority to expel a partner.

It is always unlawful to expel a partner. If B and C wish to carry on business without A the business will have to be dissolved and re-commenced by B and C.

It is a code of best practice which instructs directors of listed companies how to maximise profits for the benefit of shareholders

It is a body of law, morals and ethics designed to ensure that the shareholders of listed companies are treated fairly by the board

It is the body of rules and ethics primarily concerned with the effective control, business efficacy and accountability of the management of public-listed companies for the benefit of stakeholders

It is the set of rules contained in the constitution of listed companies which governs the relationship between the board and the shareholders

It covers every possible dilemma that an accountant might face

It is based on values rather than compliance

It is a financial requirement of accountants

It establishes the fundamental principles of professional ethics for professional accountants

Ethics

Social responsibility

Corporate governance

Professional behavior

To ensure that clients or employers receive a competent professional service

To avoid accusations of negligence

To ensure successful career development

To earn the respect of their colleagues

Whether advertisers are given more favorable editorial coverage than other companies that do not advertise in your company's magazines

Whether the paper used for the magazines comes from sustainably managed forests or can be recycled

Whether your company's magazines are more popular than competitor titles  

Whether sales targets are so high that they implicitly encourage salespeople to ignore corporate values and principles

Mr A has acted in breach of contract as Mr B has accepted his offer

Mr A was free to sell the goods to Mr C as communications by email are presumed to show that the parties did not intend to create legal relations

Mr C has intervened in the contract of Mr A and Mr B and can be forced to return the goods for the benefit of Mr B

Mr A was free to sell the goods to Mr C as Mr B's email amounted to a counter offer which rejected Mr A's offer

A contract for the sale of a motor car.

A contract of employment.

A contract for the sale of land.

A contract for the provision of services.

A partnership.

A public limited company.

A private limited company.

Either a private limited company or a public limited company.

The review of the internal audit programme and significant findings of the auditors. The review of the company's systems of internal control. The review of the company's system to facilitate whistle blowing

The review of the company's financial statements and any interim reports produced. The review of the structure, size and composition of the board. The review of the company's internal control and risk management system

The discussion with auditors on any significant matters that arose during the audit. The recommendations on the appointment and removal of auditors. The setting of the audit fee in discussion with the auditors.

The review of the company's financial statements and any interim reports produced. The review of the company's systems of internal controls. The review of the audit report and any management letter provided by the external auditor

The Accounting and Auditing Policy Committee

The Financial Reporting Council

The Financial Standards Accounting Board

The International Accounting Standards Board

Independent review of risk and reporting.

Independence in dealing with auditors.

They are fairly paid (not too high or low).

New directors are fairly appointed.

(i) only

(i) and (iii) only

(ii) only

(iii) only

In order to register a company, promoters must include a Memorandum of Association in the documents submitted to the Register of Companies.

A company cannot be registered with the same name as a company already on the register.

For a company with a share capital, the application for registration must contain a statement of capital and initial shareholdings.

The directors of a newly registered company cannot also act as directors of another company.

Acting in the interests of one's employer

Seeking to maximize a company's shareholder return on investment

Playing a role within global, local, professional or other communities

Fulfilling public duty

A director may be removed from office for any reason by an ordinary resolution.

A special resolution is needed to dismiss a director if the Articles of Association provide that he is to be a director for life.

The company must be given 28 days' notice of a proposed resolution to dismiss a director.

A director who is under threat of removal has the right to speak at the meeting, whether or not he is a member.

(i) and (ii) only

(i) and (iii) only

(ii) and (iii) only

(i), (ii) and (iii)

The duty to provide work.

The duty to obey the employer's lawful instructions.

The duty to maintain mutual trust and confidence.

The duty not to disclose confidential information.    

(i) only

(ii) only

(i) and (ii) only

(ii) and (iii) only

Where a wrong has been done to the company it is the company which should sue.

Where a wrong has been done to the company it is the directors who should sue.

Where a wrong has been done to the shareholders it is the company which should sue.

Where a wrong has been done to the directors it is the company which should sue.

(i) only

(ii) only

(iii) only

(ii) and (iii) only

Societal and professional values

Personal and corporate values

Corporate and professional values

None of the above

“It is doing the right thing when no-one is watching”

“It is doing the right thing because everybody is watching”

“It is doing the right thing because you have to”

“It is doing the right thing, because it's for the best”

The contract between AB Ltd and CD Ltd is frustrated.

CD Ltd is legally entitled to refuse delivery of the desks

The failure to deliver the filing cabinets is a breach of a warranty which entitles CD Ltd to claim damages

The delivery of the desks amounts to substantial performance of the contract and CD Ltd is obliged to pay the contract price less an amount for the defects in performance

A basic award is calculated related to the alleged employee's conduct and circumstances of the case.

A compensatory award may additionally be made.

The award may be reduced if the employee's conduct contributed to the dismissal.

Any award is subject to the statutory minimum sum identified.

Objectivity

Transparency

Confidentiality

Integrity

Shareholders

Stakeholders

Investors

Employees

Not related to an organization's code of ethics

In conflict with an organization's values

Rooted in an organization's values and code of ethics

Not related to each other

The ability to carry on business without holding an annual general meeting

The fact that business can be earned on with a minimum of one company secretary.

The ability to keep the articles of association private

The fact that business can be carried on with a minimum of two directors

Yes - the sales team are entirely at fault and should be dismissed

Yes - management has put the sales team under a lot of pressure and members of the team appear to have engaged in unethical sales practices

No - meeting sales targets is a business, not an ethical issue

No - the management has behaved unfairly so the way that the sales team has responded is justified

Corporate governance is primarily concerned with the ability to control the activities of board of directors of listed public limited companies.

The majority of shares in listed public companies are usually held by the board so that independent shareholders have insufficient power to exercise control over the board.

Listed public companies in the UK are required to disclose in their annual reports the extent to which they have complied with the requirements of corporate governance.

The UK Corporate Governance Code contains codes of best practice which do not have the force of law.  

increases productivity through fewer accidents and lower staff turnover

reduces the risk of accidents and HIJ company's insurance premiums

reflects HIJ company's core business values

improves HIJ company's reputation and access to investment from a wider range of investors

is the right thing to do

(i) and (ii) only

(ii) and (iii) only

(i) and (iii) only

(i), (ii) and (iii)

Nothing further

Request a further meeting with the Finance Director  

Ask for confirmation in writing from the Director

Resign

Bring the matter to the attention of the Managing Director

Ask for advice from the company's external legal advisors

(i) and (ii) only

(ii) only

(ii) and (iii) only

(iii) only

Goods on display in a shop window.

A billboard advertisement

Goods on display on a supermarket shelf.

A street vendor who offers a passerby a bunch of bananas for £1.

A man who offers to sell his car for £1500 to a potential buyer.

X will be able to rely on the provision in the articles and outvote any proposal to dismiss him as a director.

The provision in the articles is void as it effectively means that X is irremovable as a director of XYZ Ltd.

The clause in the articles cannot be used by X as it is not an ordinary membership right.

The company would be able to pass a special resolution removing the provision in the articles and then dismiss X by passing an ordinary resolution.

workers aged 16-18

workers aged 16-17

workers aged 15-17

workers aged 16-19

The separation of the roles of Director and Company Secretary

The appointment of independent non-executive directors to the Board

The establishment of an audit committee

The identification of an independent director as primary shareholder contact

In England the government cannot make law without the authority of Parliament.

In England the government can pass a law overruling any Act of Parliament.

In England the government is not bound by the law.

In England the government may delegate authority to a local authority to make law.

(i) only

(i) and (ii)

(i) and (iii)

(iii) only

Insolvency or bankruptcy for the company

Prison sentences for company directors

Loss of credibility

A significant rise in the company's share price

Do as requested

Challenge the request

Ask for confirmation in writing from the director

Refuse

Bring the matter to the attention of the managing director

Ask for advice from the company's external auditors

The company is to be treated as if it has unlimited objects.

The company may choose to restrict its objects by including provisions to that effect in its Articles of Association.

The company will not be able to place any restrictions on its objects clause.

If the company has restrictions on its objects they may be amended by special resolution.

The identification of an independent director as primary shareholder contact

The appointment of executive directors to the Board

The separation of the roles of Chairman and Chief Executive

The establishment of an audit committee

The Professional Oversight Board for Accountancy

The International Federation of Accountants

The Financial Reporting Council

The Financial Review Board

Ethics

Social responsibility

Corporate governance

Professional behavior

Wye Ltd can withdraw the offer at any time before Zed Ltd has accepted.

Wye Ltd is contractually obliged to keep the offer to Zed Ltd open for 7 days.

If Zed Ltd accepts the offer by post on 4th of May, then there is a contract from 4th May.

If Wye Ltd posts a revocation of the offer on 2nd of May which is received by Zed Ltd on 3rd May then the offer is withdrawn with effect from the 3rd May.

A commercial transaction.

An agreement by Exe Ltd to make a gift to Wye Ltd.

A social arrangement.

A contract between father and son.

The Professional Oversight Board for Accountancy

The International Federation of Accountants

The Auditing Practices Board

The Financial Review Board

An employer is vicariously liable for all acts of his employees committed in the course of their employment.

An employer is vicariously liable for torts committed by his employees in the course of their employment.

An employer is vicariously liable for all torts committed by employees and independent contractors.

An employer is vicariously liable for all the acts committed by employees and independent contractors.

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

Integrity

Objectivity

Responsibility

Professional behavior

(ii), (i), (iv), (iii)

(i), (ii), (iv), (iii)

(i), (ii), (iii), (v)

(ii), (iv), (i), (iii)

Independent non-executive directors should be appointed to the boards of listed companies

An audit committee consisting of a majority of non-executive directors should be established to oversee the company's finances

Executive directors should not be offered service contracts for more than five years unless approved by the shareholders in a general meeting

The remuneration packages of executive directors should be agreed by a remuneration committee wholly or mainly comprising non-executive directors

Integrity + Professional competence and due core

Integrity + Objectivity

Confidentiality + Professional competence and due care

Professional behaviour + Objectivity

Objectivity + Confidentiality

Professional behaviour + Integrity

Confidentiality + Professional competence and due care

Motivation to do what is right

Motivation to come to a decision as quickly as possible

Motivation to do what is personally satisfying

Motivation to help others

The separation of the roles of Chairman and Managing Director

The appointment of competent accountants in the finance function

The establishment of an audit committee

The reporting to shareholders of risks and internal controls

the company and its directors

the company and its customers

the company and its members

the company and its creditors

Values and code of ethics

The Board

Stakeholder relationships

The Government

Ability to exercise good judgment

Ability to communicate effectively

Ability to calculate correctly

Ability to be efficient

Differences in law and tax

Differences in history and culture

Differences in types of shareholder

Difference in language

Difference in GDP

The Board of SSS a public company limited by shares, consists of four executive directors and five non-executive directors. The Board is headed by Mr I who is both CEO and Chairman The non-executive directors do challenge the strategic direction of the company and their opinions are considered and acted upon

The Board of TSD, a public company limited by shares, consists of four executive directors and three non-executive directors. The Chairman, Mr C is the brother of the CEO Miss K The board meets ten times a year The board meetings are dominated by the siblings but the final decision is generally taken by the CEO

The Board of END, a public company limited by shares, consists of four executive and five non-executive directors. The Board is headed by its Chairman, Miss A and the CEO is Miss B. The board has developed clear divisions of responsibility and consequently only meets in full once a year to approve the financial statements

The Board of DDE, a public company limited by shares, consists of four executive and five non-executive directors The Board is headed by its Chairman Mr A and the CEO is Mr H. The board meets ten times a year. The non-executive directors do challenge the strategic direction of the company and their opinions are considered and acted upon

Yes - but only if the waste causes damage to the local environment

Yes - the manager who created the spill has behaved unethically and should be disciplined

Yes - the company has a duty to report something that might breach environmental legislation and could cause environmental damage

No - the leak was a mistake, so this is not an ethical issue

(i) only

(ii) only

(iii) only

(ii) and (iii) only

The business name of a private company limited by shares must end in “Limited” or “Ltd”.

Both public and private companies may use a business name.

If a business name is used, the name of the proprietor must be stated on business correspondence and at the premises where the business is carried on.

If a business name is used which is the same or very similar to that of an existing business, an action in the tort of passing off may be brought by the existing business.

(i) and (ii).

(i).

(i), (ii) and (iii).

(iii).

The Remuneration Committee usually consists entirely of non-executive directors

The directors may be dismissed by the shareholders tor any reason

The executive directors are bound to carry out only those duties which are stated in the director's contract of service

The boards of listed companies commonly appoint sub-committees to enable them to comply with corporate governance requirements

A false representation of the facts.

Made by one party to the other before any contract is made.

An inducement to mislead one party into entering the contract.

Distortion of facts.

More than two parties were involved.

There was at least one witness when the misrepresentation occurred.

(i) only

(i) and (ii) only

(ii) and (iii) only

(i), (ii) and (iii).

(i) only

(ii) only

(iii) only

(i) and (ii) only

As it is a limited company, RP Ltd is not obliged to pay its debts.

As the liability of R and P is limited they are not obliged to pay anything towards the company's debts.

Rebecca and Paul must each pay 50% of the company's debts.

Rebecca and Paul are each obliged to pay the other half of the nominal value of their shares, and no more.

Because they are the foundations of reasoning and professional practice

Because they are the foundations of human rights

Because they are the foundations of corporate responsibility

Because they are the foundations of management accounting

Each supplier must comply with JKL's policy on limiting non-recyclable packaging to 10% of total packaging per contract

Haulage firms must demonstrate that they have a policy to reduce emissions from their fleet

Each year approval as a supplier to the company will only be granted if the prices paid to the supplier are reduced by 1%

Preference will be given to local suppliers over those located at a greater distance from the company

The omission of an invoice from the purchase ledger due to it being mis-filed in the petty cash invoices.

The theft of cash from the cash till by an employee.

The loss on the sales of a car due to its accumulated depreciation on the day of sale being too low as a consequence of a depreciation policy of 25%

The selection of an incorrect accounting policy by the management team whereby sales of goods are recognised on the day that the order is placed despite the company policy of a three day cooling off period

The sending of a bogus invoice to another company

The misallocation of a transaction against the incorrect account code in the general ledger

(i) only

(i) and (ii) only

(ii) only

(iii) only

(i) only

(ii) only

(iii) only

(ii) and (iii) only

Integrity

Objectivity

Professional competence and due care

Professional behavior

A duty to provide a reference.

A duty to provide work.

A duty to pay wages.

An employee's duty to disclose his own misconduct.

Subject to the company's Articles of Association, shareholder approval is not required to enable the company to borrow money.

Subject to the company's Articles of Association, shareholder approval is not required to authorise the issue of shares direct to one person for a non-cash consideration.

A company's Articles cannot provide that the Articles are unalterable.

The Articles of Association may be altered by special resolution.

A decision by the Supreme Court.

A provision in an Act of Parliament

A Regulation issued by the European Council of Ministers.

A Statutory Instrument.

(i) only

(ii) only

(i) and (ii) only

(ii) and (iii) only

Rapid advances in technology

Evolving regulations

Career progression

Computer virus-protection

Yes - she is using company property for other purposes without permission

Yes - she should not be undertaking charitable initiatives

No - it is just stationery and nothing valuable

No - the company would undoubtedly not mind her using the stationery for charitable purposes, so there is nothing wrong with her taking it

The board.

Any shareholder.

The company.

The holders of the majority of the company's shares.

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

Written resolutions may only be passed by private companies.

In most cases, a written resolution may be used instead of holding a general meeting.

A written resolution can be used in place of an ordinary or special resolution.

A written resolution is only valid when it has been signed by all those who were entitled to attend and vote at company meetings.

Svetlana - Recorded a payment of £530 in the company's expenses account rather than its sales account.

Jim - Recorded a payment of £1,000 in both the company's expenses account and the sales account.

David - Forgot to record a payment of £50 in the company's sales account.

Jean - Recorded a customer payment as £120 when they actually paid £150.

Janet - Recorded the payment made by one customer in another customer's account.

Zed plc only

Zed plc and the directors of Zed plc.

Zed plc, its directors and shareholders.

Zed plc, its directors and shareholders and any other person who has suffered loss as a result of the negligent audit.    

The Articles of Association of a private company limited by shares may be altered by ordinary resolution.

The Articles of Association of a private company limited by shares may be altered by a written ordinary resolution.

The Articles of Association of a private company limited by shares may be altered by a special resolution.

The Articles of Association of a private company limited by shares may be altered by a board resolution.

B wrote to A accepting his offer to sell the van for £5,000.

B wrote to A and offered to buy the van at £4,800. B stated “if I hear no more from you in the next three days I shall assume that you agree to sell the van to me at that price.”  Three days have now passed and B has heard nothing from A.

B offered to buy the van for £4,800. A wrote to B accepting his offer. B wrote back stating: “payment will be made over three months.”

B offered to buy the van for £4,500. A wrote to B accepting his offer but later changed his mind and sent an email to B withdrawing his acceptance. The email was read by B before he read A's letter of acceptance.

Because Steve could be motivated to steal from the company.

Because Steve might not work as hard.

Because there is a risk Steve could get aggressive with other employees within the company.

Because Steve might start to be untruthful and not disclose information that he should.

Internal and external auditors should meet regularly to ensure timely and efficient completion of the work

In some countries, there is a statutory requirement to have both an internal and an external audit

Internal auditors may provide engagement work programs and working papers to external auditors

Oversight of the work of external auditors is the responsibility of the chief internal auditor

Public trust in business

Legislation in the US and elsewhere

Public trust in accountants

All of the above

(i) only

(i) and (ii) only

(ii) and (iii) only

(i), (ii) and (iii).

Professional competence

Credibility

Integrity

Professional behavior

Incompetence

Negligence

Discrimination

Conflict of interest

All the recommendations were incorporated into the Stock Exchange Listing Rules.

Directors should never be given discounted share options.

Annual bonuses should not be pensionable.

Any long-term incentive schemes to be offered to directors should first be approved by the shareholders.  

Specific performance.

An injunction.

Damages.

Rescission.

A contract breaker is liable for losses which arise naturally from the breach.

A contract breaker is liable for special losses which are within his contemplation.

Damages will not normally be awarded for the distress caused to the innocent party by the breach.

Damages are designed to compensate the innocent party and to punish the contract breaker.    

When the boundaries between right and wrong are unclear

When the code of ethics does not specify what action to take

When an individual is under pressure to do something that does not feel right

All of the above

A person who signs a contract is deemed to have read it.

A person is assumed to know of a term of which he has been given reasonable notice at or before the time of the contract.

A person seeking to rely upon an onerous clause must show that he has taken sufficient steps to bring the clause to the other party's attention.

A person cannot be bound by an onerous clause.

To accountants by law

To accountants around the world

To those accountants whose employers sign up to the principles of acting ethically

To all professionals, including accountants

The consideration for the contract is less than £5,000

There are 5 or fewer parties to the contract

The contract has no implied term

The contract does not have to be in any particular form

Fear driven

Mandatory

Discretionary

Implicit

Misapplication or ignoring of ethical values

Misapplication or ignoring of accounting principles

Misapplication or ignoring of regulations

Misapplication or ignoring of human rights

Introduce a statement of values which outlines what the organisation stands for.

Ensure the company's ethical expectations are thoroughly communicated.

Ensure that the company's chairman and CEO lead by example.

Ensure that the company's organisational systems encourage adherence to its ethics.

Ensure that disciplinary action is taken when the company's ethical code is broken.

Only employ directors who have proven strong moral values.

(i) only

(i) and (ii) only

(ii) and (iii) only

(iii) only

a deadlock in commercial disputes

a particular position on the spectrum of ethical philosophies

two or more possible solutions to an ethical problem

two or more opinions on the spectrum of ethical philosophies

Only offering pay rises to female employees if they were under a certain weight.

Rejecting job applications if the applicant had a foreign-sounding name.

Only offering senior managerial roles to male employees.

Making it company policy that no one over 65 could be hired.

Having a rule that no one under 5ft tall could be hired.

Because even though he has discovered material statements, he has not deemed them to be pervasive.

Because he has found the misstatements to be both material and pervasive.

Because he was unable to find enough suitable evidence to determine whether or not the misstatements were both material and pervasive.

Because he has come to the conclusion that the misstatements aren't an issue, but should be noted in the report.

The Articles may only be changed if Max, Nick and Olga vote in favor of the proposal.

The Articles may be changed if any two of the shareholders vote in favor of the proposal.

The Articles may be changed if any one of the shareholders votes in favor of the proposal.

The Articles may be changed if Louis and any one of the shareholders vote in favor of the proposal.

Reliability

Courtesy

Timeliness

Respect

Respect

Responsibility

Reliability

Timeliness

X is correct and cannot be said to be in breach of the agreement with Bee Ltd.

If the court finds that Cee Ltd was set up by X to avoid the agreement with Bee Ltd, it will "lift the corporate veil" and enforce X's contract with Bee Ltd against X and Cee Ltd.

Cee Ltd will be bound by the agreement because a company is always liable for the actions of its shareholders.

The agreement between Bee Ltd and X is of no legal effect, as it attempts to regulate X's activities after he has left Bee Ltd's employment.

Materiality

Integrity

Objectivity

Professional behavior

Trust

Compliance

Rules

Professional bodies

His personal and corporate values

His personal and societal values

His professional and corporate values

His personal and professional values

(i) only

(i) and (ii) only

(ii) only

(i), (ii) and (iii)

Integrity

Objectivity

Professional competence and due care

Professional behavior

(i) only

(ii) only

(iii) only

(i) and (ii) only

Providing ethical leadership which focuses on minimizing environmental costs sustainably.

Providing ethical and strategic leadership which focuses on sustainable value creation.

Providing strategic leadership which sustains the maximization of short term value.

Providing sustainable ethical and strategic leadership which focuses on operating profit.

Little or no legal action

Improved reputation

Improved staff morale

Competitive advantage

Increased market penetration

Higher productivity levels

Increased profits

(i) only

(i) and (ii) only

(ii) only

(iii) only

Exe Ltd is entitled to part of the delivery fee.

Exe Ltd is entitled to nothing.

Exe Ltd is entitled to a reasonable sum for the work done.

Exe Ltd is entitled to the full £2,000.

(i) and (ii)

(i)

(ii)

(i) and (iii)

If a company has restricted the ability of its directors to contact and the directors ignore the restrictions, then the outsiders may not enforce the contract.

The shareholders of a company have the ability to enter into a contract on behalf of the company, irrespective of any restrictions on the directors.

If a company wishes to restrict the ability of its directors to enter into particular contracts it may do so by placing restrictions on the directors in its

articles of association

If the shareholders learn that the directors are about to ignore the restrictions placed upon their ability to contract by the company the shareholders are unable to prevent the directors from proceeding

(i) only

(i) and (ii) only

(ii) only

(ii) and (iii) only

It will take a long time.

It will cost a lot of money.

There is a risk of confidential information leaking.

Reputation with stakeholders will decrease.

Interests of shareholders and directors may become unaligned if they aren't already.

Shareholders may become concerned about the state of the company.

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

(i) and (ii) only  

(ii) and (iii) only

(i) and (iii) only

(i), (ii) and (iii).

Give bonus payments to the director when he hits the company's targets.

Implement an incentive scheme to reward the director when he works in line with the interests of shareholders.

Ensure the deliverance of a detailed and comprehensive Chairman's message.

Widen the remit of the governance report to includes details about the the company's strategy, business model and risks.

Corporate and professional values

Corporate and societal values

Societal and personal values

All of the above

B may be dismissed at any time by an ordinary resolution of the shareholders.

B cannot vote as a shareholder in any meeting called to dismiss him as a director.

The company must be given 28 days notice of any proposed resolution to dismiss B.

B is entitled to speak at the meeting called to consider the proposal to dismiss him.

Integrity

Objectivity

Professional competence and due care

Professional behavior

The CIMA ethics helpline

Legal advisors.

The external auditors.

The internal whistle-blowing helpline

Client involvement in illegal activities (such as money laundering)

Dishonesty

Questionable financial reporting practices

A client having an objectionable personality

There is no contract between X Ltd and Y Ltd because the offer was withdrawn on 4th October when the revocation was sent to Y Ltd.

There is no contract between X Ltd and Y Ltd because the offer was withdrawn on 8th October when the revocation was received by Y Ltd.

X Ltd and Y Ltd contracted on 5th October.

X Ltd and Y Ltd contracted on 7th October.

The current directors and shareholders of the company.

The current and former directors of the company.

The current directors of the company.

The current directors and former shareholders of the company.

are inflexible and expensive

motivate compliance through value and judgment

are subject to precise definitions of wording and hence become contentious

have subjective standards which may cause confusion.

require objective enforcement by an independent party.

are inconsistently applied due to the need for judgment.

Yes, her feelings could be influencing her independence of mind

No, she is not actually dating Mr L so her independence of appearance is not compromised

No, provided she does not act on her feelings and continues to be professional

Yes, having dinner with a work colleague can affect her independence of appearance

Constancy

Confidentiality

Contemplation

Conviction

Obey the law

Disregard conflicting standards

Act in the interests of his or her employer

Raise his or her concerns by speaking up

Because the advertisement was an open offer.

Because a seller can choose to withdraw their item whenever they want.

Because jimmy only stated that he intended to sell the scooter.

Actually, jimmy does have to sell the scooter.

Customer

Media

Employee

Government

The memorandum must be in the prescribed form

The memorandum must state the objects for which the company is being registered

The memorandum must state that the subscribers agree to take at least one share each

The memorandum must state that the subscribers wish to form a company under the Companies Act 2006

takes personal responsibility for ensuring that he is professionally competent to undertake work for the company

takes personal responsibility for ensuring that the information he provides is unbiased and unaffected by conflicts of interest

takes personal responsibility for ensuring that he is independent in his relationship with his employer.

takes personal responsibility for ensuring that he is straightforward and honest in his business dealings

takes personal responsibility for ensuring that his behavior complies only with that of his professional body and therefore the company can have confidence in his work and complain to his professional body if they are unhappy

takes personal responsibility for ensuring the accuracy and validity of the judgments of his directors in assessing the risk appetite of the company.

Nothing further

Request a further meeting with the Finance Director

Ask for confirmation in writing from the Director

Resign

Bring the matter to the attention of the Managing Director

Ask for advice from the company's external auditors

Loss of reputation

Loss of Chartered Institute status

Undermined credibility

Systematic widespread fraud

A company cannot use its share capital which must be set aside as a fund for creditors.

In general, a company can use its share capital for any reason whatsoever, as long as it ensures that there is sufficient remaining to meet the company's debts.

In general, a company is not able to freely return its share capital to its members.

A company cannot use its share capital, and may only return it to its members with the permission of the court.

(i) and (ii) only

(i) only

(ii) and (iii) only

(ii) only

Accountability, integrity, risk management

Accounting, integrity, risk management

Accountability, integration, financial management

Accounting, integration, financial management

(i) only

(i) and (ii) only

(ii) and (iii) only

(i), (ii) and (iii).

Via an external customer

Via an in-house helpline

Anonymously

All of the above

The company must pass a special resolution to authorize the reduction of capital.

The reduction must be approved by the court.

It is not necessary for the company’s Articles of Association to authorize a reduction of capital.

The directors must make a solvency statement.

(i) only

(ii) only

(iii) only

(ii) and (iii) only

(i) and (ii) only

(ii) and (iii) only

(i) and (iii) only

(i), (ii) and (iii)

The head of the audit must report to a high level within the organisation.

The internal audit activity must be free from interference.

The head of the internal audit must communicate and interact directly with the board of directors.

Any problems identified during the audit should be reported.

Action plans should be negotiated with management in order to address any identified problems.

Integrity

Objectivity

Confidentiality

Professional behavior

Company X would only have a duty to try to stop Company Y from employing child labour if it was illegal in the countries concerned

Company X does not have any responsibilities, as its own record is good and it is not employing any children

It should ensure that it does not inadvertently use any of Company Y^s child workers in carrying out its own work on the project

It should attempt to persuade Company Y of its ethical responsibilities to stop employing children.

The separation of the roles of Chairman and Chief Executive

The appointment of independent non-executive directors to the Board

The establishment of an audit committee

The appointment of a senior external auditor to the Board

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.

Management

External auditors

Internal auditors

Management and external auditors

Management and internal auditors

External auditors and internal auditors

It is not necessary for the company's Articles of Association to authorize a reduction

The shareholders must pass a special resolution

The directors must make a statement as to the company's solvency

The reduction must be approved by the court

Because they tend not to be 'black and white'

Because they tend to be kept secret

Because they are open to interpretation

Because there are no records

The shareholders as a whole may sue the directors for breach of contract.

Any or all of the shareholders may sue the company for breach of contract.

Individual shareholders have no remedy against the company.

Individual shareholders may sue the directors for breach of contract.

Act with integrity

Exercise objectivity

Exercise professional skepticism

All of the above

Leadership

Professionalism

Honesty

Integrity

Unlike a general partnership, a private company limited by shares may create a floating charge as security for a loan

Private companies limited by shares and general partnerships are required to disclose financial information regarding the operation of the business to the general public

In the event of insolvency both a private company limited by shares and a general partnership may be placed in insolvent liquidation

Both a private company limited by shares and a general partnership are established by registration

Purchase an off the shelf company.

Set one up anyway but only complete the most important steps.

Walk away from his dream - the only way he can own his own business is by following the steps involved in setting one up.

Become a sole trader.

If the shares were issued for cash, they should have first been offered to the existing members in proportion to their current shareholding unless statutory pre-emption rights have been dis-applied.

If the shares were issued for a non-cash consideration, they were not subject to the statutory pre-emption rights of shareholders unless the articles of association so provided.

If the directors had the legal authority to issue shares, the issue cannot be challenged by the shareholders.

The share issue is voidable and the original shareholders may ratify or cancel the issue by ordinary resolution.

The name of the company

The objects of the company

The location of the company’s registered office

The names of the first directors

It is a statement of law by a court which is binding on all higher courts which are called upon to decide a similar case.

It is a statement of law by a court which is not binding on lower courts which are called upon to decide a similar case.

It is a statement of law by a court which is binding on all lower courts which are called upon to decide a similar case.

It is a statement of law by a court which is binding on all future courts which are called upon to decide a similar case.  

To improve the cost efficiency of internal processes

To identify gifted staff

To provide guidance for staff

To help staff to tackle the ethical dilemmas that they might face at work

(i) only

(i) and (iii) only

(ii) and (iii) only

(i), (ii) and (iii).

The issue is lawful as ABC Ltd may issue its shares for a non-cash consideration.

The issue is lawful because ABC Ltd does not need to first offer the new shares to its existing members.

The issue is only lawful if the directors have the necessary authority to issue the shares.

The issue is only lawful if ABC Ltd arranges to have the business valued by the company's auditor.

(i) only

(ii) only

(i) and (iii) only

(i), (ii) and (iii)

Reduced risk

More control

A requirement to hire external auditors

Less paper work

Less bureaucracy

An accountant politely turns down a request to help produce a business plan for a friend who wants to start up a new company which will be a rival firm to their current employer.

When deciding whether or not to move production of a particular product from one site to another, employers listen to the views of a wide range of employees, including those on the factory floor

For several weeks before going on annual vacation, an accountant doubles her normal working hours to ensure that she meets the deadline for the preparation of a set of management accounts.

An accountant agrees to accept calculations provided by his manager relating to a new project, despite having misgivings as to their accuracy. The manager has several years more experience of such projects than him

(i) only

(i) and (ii) only

(i) and (iii) only

(iii) only

Think objectively; act professionally; continue to learn and develop

Think subjectively; act professionally; continue to question

Think professionally; act personably; continue to question

Think accurately; act purposefully; continue to learn and develop

Integrity

Professional behavior

Objectivity

Accountability

(i) and (ii) only

(ii) and (iii) only

(i) and (iii) only

(i), (ii) and (iii)

A Ltd's factory was flooded.

A Ltd had taken on too many orders and had to give priority to its regular customers.

A Ltd's employees went out on strike.

A number of A Ltd's key workers were absent through illness.

The reduction of waste on building sites

The formation of a world class team of employees to win more business

The use of recycled paper in head office

Health and safety training for employees and sub-contractors

Serious misconduct

Refusing to join an independent trade union.

Pregnancy

Selection for redundancy because of membership of a trade union.  

Media

Employee

Non-governmental organizations

Competitor

There are two or more unpalatable choices

There is a choice between what is good for me and what is prescribed professional standards

You are asked to do something illegal

You have no choice

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