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

1. You work for an airline company and discover a series of regular payments made to a lobbying group that campaigns to allow people freedom to fly as and when they choose without being taxed for contributing to global warming. The group's website includes specific commentary that claims to 'expose the myth of global warming'. Neither your company nor the lobbying group (which describes itself as
'independent') mention the financial link between your organizations. Is this an ethical issue and why?

A) Maybe - depending on whether the lobbying group is funded by other airlines as well as your company
B) Yes - the lobbying group appears to be funded at least in part by your company so it is not independent and is therefore misleading people about its status
C) No - companies are entitled to fund any groups that they choose, particularly if it is in their financial interest. Neither party has done anything unethical
D) No - there is unlikely to be any connection between the payments and the group's aims. After all, companies regularly fund Non-Government Organizations (NGOs) and other types of organization

2. Which of the following is correct in relation to damages?
(i) The victim of a breach of contract may claim damages in respect of losses caused by the breach which were within the contemplation of the contract breaker.
(ii) As a general rule damages cannot be claimed for annoyance and inconvenience caused by the breach of contract.
(iii) Where there is a breach of contract, damages are available to the innocent party as of right.

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

3. One of your colleagues is running an event to raise money for a local charity. One evening, you see her taking boxes of pens, notepads and post-it notes. When you challenge her, she says that she is taking them for her fundraising and, although she has not asked permission to take them, she is sure the company will not mind. Is this an ethical issue and why?

A) Yes - she should not be undertaking charitable initiatives
B) Yes - she is using company property for other purposes without permission
C) No - it is just stationery and nothing valuable
D) No - the company would undoubtedly not mind her using the stationery for charitable purposes, so there is nothing wrong with her taking it

4. Where a countries' rules protect whistleblowers. they usually only do so where there has been a
"qualifying disclosure" Which of the following statements best describes the minimum level of information which a whistleblower needs to have to make a "qualifying disclosure"?

A) Certainty that at least one company rule is being breached or has been breached in the past
B) Reasonable grounds to believe that sufficiently serious malpractice is taking place
C) Knowledge that company rules are about to be breached
D) A suspicion that serious malpractice has taken place

5. Which of the following does NOT describe the responsibilities of the audit committee?

A) 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
B) 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
C) 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.
D) 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

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