CIMA Business Ethics and Corporate Governance 2

Question 1

In the context of corporate governance, what does the term 'agency problem' refer to?

Accepted Answer

Conflict of interest between principals (shareholders) and agents (managers)

Answer

The difficulty of finding qualified board members

Answer

Legal issues arising from using agents in business transactions

Answer

The cost of hiring external auditors

Question 2

Which element of the CIMA ethical decision-making framework asks 'Is it fair to all parties concerned?'

Accepted Answer

The Fairness test

Answer

The Transparency test

Answer

The Effects test

Answer

The Stakeholder test

Question 3

Under UK Corporate Governance Code principles, how often should all directors of FTSE 350 companies stand for re-election?

Accepted Answer

Every year

Answer

Every two years

Answer

Every three years

Answer

Every five years

Question 4

Which type of audit focuses on whether an organization is achieving its objectives efficiently and effectively?

Accepted Answer

Value for money audit

Answer

Financial audit

Answer

Compliance audit

Answer

Systems audit

Question 5

What is the main purpose of a whistleblowing policy in an organization?

Accepted Answer

To encourage employees to report suspected wrongdoing without fear of retaliation

Answer

To monitor employee communications for compliance

Answer

To investigate all financial transactions above a threshold

Answer

To provide a channel for customer complaints

Question 6

CIMA's Integrated Reporting framework () requires organizations to report on how they create value. Which of the following is NOT one of the six capitals in ?

Accepted Answer

Reputational capital

Answer

Financial capital

Answer

Social and relationship capital

Answer

Natural capital