ACCA AS Ethics and Corporate Governance

Question 1

According to the IESBA Code of Ethics, which of the following is NOT one of the five fundamental principles of professional ethics?

Accepted Answer

Profitability

Answer

The five fundamental principles are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour — profitability is not included.

Question 2

The agency problem in corporate governance refers to which of the following situations?

Accepted Answer

Conflicts arising from the separation of ownership and control between shareholders and directors

Answer

The agency problem occurs because directors (agents) may pursue their own interests rather than those of shareholders (principals) due to the separation of ownership and control.

Question 3

Which UK corporate governance report first introduced the 'comply or explain' approach to governance codes?

Accepted Answer

The Cadbury Report (1992)

Answer

The Cadbury Report (1992) introduced the 'comply or explain' principle, which forms the foundation of the UK Corporate Governance Code.

Question 4

Which of the following best describes a unitary board structure?

Accepted Answer

A single board containing both executive and non-executive directors

Answer

A unitary board, as used in the UK, is a single board that includes both executive directors who manage the company and non-executive directors who provide oversight.

Question 5

Under the UK Corporate Governance Code, what is the recommended minimum proportion of independent non-executive directors on a FTSE 350 company board (excluding the chair)?

Accepted Answer

At least half of the board

Answer

The UK Corporate Governance Code recommends that at least half the board, excluding the chair, of a FTSE 350 company should comprise independent non-executive directors.

ACCA Applied Skills Practice Test

ACCA Applied Skills Practice Test

ACCA AS Ethics and Corporate Governance