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

1. X was employed by Bee Ltd as its senior design consultant. X contracted with Bee Ltd that, when his employment with the company ceased, he would not act in competition with it or solicit its customers.
After X left Bee Ltd, he registered a company called Cee Ltd which immediately began working in competition with Bee Ltd and soliciting its customers. Bee Ltd complained to X about this conduct, but X stated that, as the work was being undertaken by Cee Ltd, a separate legal entity, X had not acted in breach of the agreement with Bee Ltd.
Which of the following statements is correct?

A) Cee Ltd will be bound by the agreement because a company is always liable for the actions of its shareholders.
B) X is correct and cannot be said to be in breach of the agreement with Bee Ltd.
C) 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.
D) 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.

2. Which of the following is correct in relation to international relations?
(i) International regulations are voluntarily entered into by commercial and professional bodies to standardize practices and procedure to make it easier to enter into international trading agreements.
(ii) International regulations which have been agreed by the professional bodies of different states are only binding on the members of those bodies or those who choose to adopt them.
(iii) International regulations may attain the force of law by being adopted by the legislatures of individual states

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

3. The International Accounting Education Standards Board has published a document titled "Approaches to the Development and Maintenance of Professional Values, Ethics and Attitudes in Accounting Education Programs'", which provides guidance about the personal qualities needed by accountants to meet the expectations of the public The particular qualities which it identifies are

A) responsibility, accountability, courtesy, independence and respect
B) responsibility, accountability, timeliness, independence and respect
C) reliability, responsibility, timeliness, independence and respect
D) reliability, responsibility timeliness, courtesy and respect

4. You work for a clothing retailer. Which of the following corporate issues is NOT related to ethics or social responsibility?

A) Sweatshop labor
B) The use of natural or organic material in your clothes
C) Whether your clothes appeal to your target markets
D) Knowingly selling fake versions of this season's high profile designer clothes

5. Which of the following are reasons why regulatory frameworks may differ between countries: Select ALL that apply.

A) Differences in law and tax
B) Difference in language
C) Differences in history and culture
D) Difference in GDP
E) Differences in types of shareholder

Solutions: