ACCA AK Business Ethics and Governance 2

Question 1

Under the conceptual framework for financial reporting, what does 'faithful representation' require?

Accepted Answer

Information must be complete, neutral, and free from error

Answer

Information must be presented in a way that maximises reported profit

Answer

Information must only include figures that management approves

Answer

Information must be presented in the most conservative way possible

Question 2

Which of the following best describes the agency problem in corporate governance?

Accepted Answer

The conflict arising when directors (agents) may pursue their own interests rather than those of shareholders (principals)

Answer

The conflict between a company and its suppliers over payment terms

Answer

The difficulty of finding a suitable advertising agency

Answer

The challenge of recruiting new board members

Question 3

An accountant discovers that their employer is involved in money laundering. Under UK law, what should the accountant do?

Accepted Answer

Report the matter to the appropriate authority, such as the National Crime Agency (NCA)

Answer

Ignore the matter as it is not their responsibility

Answer

Resign immediately without telling anyone

Answer

Confront the employer and demand they stop

Question 4

What is the purpose of an internal audit function?

Accepted Answer

To provide independent assurance on the effectiveness of governance, risk management, and internal controls

Answer

To express an opinion on the truth and fairness of the financial statements

Answer

To prepare the company's tax returns

Answer

To set the company's dividend policy

Question 5

Sustainability reporting under frameworks such as GRI (Global Reporting Initiative) requires disclosure of:

Accepted Answer

Environmental, social, and governance (ESG) impacts alongside financial performance

Answer

Only financial performance metrics

Answer

Only the company's carbon emissions

Answer

Trade secrets and proprietary information

Question 6

The 'comply or explain' approach to corporate governance means that:

Accepted Answer

Companies should comply with the code's provisions but may depart from them if they provide a clear explanation

Answer

Companies must comply with every provision of the governance code without exception

Answer

Companies can ignore the code entirely without consequences

Answer

Only financial institutions are required to follow the code