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

1. 'Remuneration' is one of the main principles in the Corporate Governance Code. Which of the following is NOT best practice under the 'Remuneration' principle?

A) The board of directors are able to set the remuneration of non-executive directors
B) Remuneration should be sufficient to attract, retain and motivate directors of the quality required to run the company successfully, but should not be excessive
C) There should be a formal and transparent procedure for developing policy on executive remuneration
D) Remuneration should be structured in order to link a significant proportion of the rewards to corporate and individual performance

2. Which of the following is INCORRECT in relation to the United States of America (USA)?
(i) In the event of a conflict between state and federal legislation, state legislation is superior.
(ii) The USA has a federal system of government.
(iii) Legislation is enacted by Congress.

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

3. On the basis of the National Minimum Wages Act 1998, what is the age range for the lowest national minimum wage entitlement?

A) workers aged 16-17
B) workers aged 16-19
C) workers aged 16-18
D) workers aged 15-17

4. Abel has just completed an audit on a large law firm. He has decided to issue a modified audit report with a qualified opinion due to the issues he discovered regarding misstatements in the company's financial records.
Why has Abel decided to issue the report with a qualified opinion as opposed a different kind?

A) Because he has come to the conclusion that the misstatements aren't an issue, but should be noted in the report.
B) Because even though he has discovered material statements, he has not deemed them to be pervasive.
C) Because he was unable to find enough suitable evidence to determine whether or not the misstatements were both material and pervasive.
D) Because he has found the misstatements to be both material and pervasive.

5. Which of the following do CIMA members NOT have a specific duty to do?

A) Uphold the good standing and reputation of their employer
B) Uphold the good standing and reputation of the profession
C) Observe the highest standards of conduct and integrity
D) Refrain from any conduct which might discredit the profession

Solutions: