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 agency problem refers to the conflict of interest that arises when managers (agents) may not act in the best interests of shareholders (principals).

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 Fairness test in CIMA's ethical decision-making framework asks whether the decision is fair to all parties concerned.

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

Under the UK Corporate Governance Code, directors of FTSE 350 companies should stand for annual re-election by shareholders.

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

A value for money (VFM) audit assesses the economy, efficiency, and effectiveness with which an organization achieves its objectives.

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

A whistleblowing policy provides a safe channel for employees to report suspected wrongdoing, protecting them from retaliation.

CIMA - Chartered Institute of Management Accountants Aptitude Test Practice Test

CIMA - Chartered Institute of Management Accountants Aptitude Test Practice Test

CIMA Business Ethics and Corporate Governance 2