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CIMA BA4 Exam Syllabus Topics:

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) 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
B) Maybe - depending on whether the lobbying group is funded by other airlines as well as your company
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) 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

2. 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) 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.
B) Cee Ltd will be bound by the agreement because a company is always liable for the actions of its shareholders.
C) X is correct and cannot be said to be in breach of the agreement with Bee 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.

3. Independence of mind allows a professional accountant to:

A) Exercise objectivity
B) Exercise professional skepticism
C) Act with integrity
D) All of the above

4. M's client has asked her to 'leave out' a few figures as he is applying for a bank loan and he wants his management accounts to, in his words, 'look better'. If M does as he asks, he promises to pay her double her fee when the loan money comes through. M is tempted by his offer, her mother has been ill and she would love to take her away on holiday. What should she do?

A) Tell the client she is unable to do as he asks, but that she knows another accountant who is happy to do that kind of thing
B) Do as the client asks, after all the banks can afford it
C) Do as the client asks; her mother's health is more important than her professional standing
D) Tell the client she is unable to do as he asks, but she would be happy to write a letter to the bank explaining his financial position

5. Which of the following is correct in relation to a company's ability to have a restricted objects clause in its constitution?
(i) A company may restrict its objects in its constitution
(ii) Any clause restricting the company's objects should be included in the company's articles of association (iii) The shareholders may pass a special resolution to alter the company's constitution by including a clause which restricts the company's objects

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

Solutions: