ALL Wrong Answers

Question 1

who compiled the code published by IFAC

Answer 1

International Ethics Standards Board for Accountants (IESBA)

a separate board within IFAC which just develops ethical code, IFAC is standards as a whole not just ethical

Question 2

what is the role of the conduct committee

Answer 2

• overseeing the FRC’s Conduct Division that monitors recognised supervisory bodies (such as CIMA)
• audit quality reviews
• corporate reporting reviews
• professional discipline
• the oversight of the regulation of accountants and actuaries

Question 3

what is someone breaching if they take a report home to do whilst watching something on TV

Answer 3

professional behaviour and due care

Question 4

what trait is this person showing:

An accountant avoids all situations that they believe could cause a reasonable observer to doubt their objectivity

Answer 4

independence

Question 5

who is the principal/agent in shareholders and directors

Answer 5

directors = agents
shareholders = principal

Question 6

who sets out the corporate governance for a plc

Answer 6

board of directors

Question 7

who does the remuneration committee make the remuneration for

Answer 7

directors and senior managers

Question 8

what are ethics

Answer 8

personal principles that guide behaviour

Question 9

what does a rules based approach attempt to do

Answer 9

anticipate every possible ethical dilemma

Question 10

what is IFACs code based on

Answer 10

compliance principles

Question 11

who does the accountant have to give information to if requested

Answer 11

regulator

Question 12

what causes a conflict of interest

Answer 12

• working part time for two rival businesses
• being employed by a close relative
• being offered a valuable gift by a friend who is also a business contact

Question 13

what kind of stakeholder is the government

Answer 13

financial
external

Question 14

who do cima members go to first to resolve an issue

Answer 14

themselves

Question 15

what kind of ethical code is CIMAs

Answer 15

ethical framework

Question 16

what do ethical codes require of its individuals

Answer 16

to respect the spirit of the law rather than the letter of the law

Question 17

why are corporate governance codes necessary

Answer 17

to encourage boards of directors to act in the best interests of all stakeholders

Question 18

benefits of a two tier board approach

Answer 18

• separation of power between those that manage the business and those controlling it for the benefit of shareholders
• more independent thinking as separate board meetings held

Question 19

common audit benchmarks:
profit before tax
gross profit
revenue
total and net assets
profit after tax

Answer 19

5% of profit before tax.
0.5 to 1% of gross profit.
0.5 to 1% of revenue.
1 to 2% of total assets.
2 to 5% of net assets.
5 to 10% of profit after tax.

Question 20

3 elements of external audit?

Answer 20

• subject matter
• evaluation
• report

Question 21

if an agreement is commercial, how is intention seen

Answer 21

If an agreement is of a commercial nature, the parties cannot argue that there was no intention to create legal relations, it is not presumed

Question 22

do employers have a duty to provide work and provide a reference?

Answer 22

• only duty to provide work is in certain circumstances (where needed to maintain skill)
• no duty to provide reference

Question 23

data principles

Answer 23

• Data not retained for longer than necessary
• Data only collected for a specific purpose
• Data is processed fairly

Question 24

powers of a health and safety inspector - what can they issue?

Answer 24

• a criminal prosecution
• a prohibition notice
• an improvement notice

Question 25

what doesn’t the equality act do

Answer 25

The Equality Act does not outlaw discrimination that is proportionate and legitimate

Question 26

who does an accountant notify if they suspect money laundering

Answer 26

• The Money Laundering Reporting Officer within their organisation
• The National Crime Agency

Question 27

what are qualifying disclosures

Answer 27

• A miscarriage of justice is likely to occur
• The environment is likely to be damaged
• A company has deliberately concealed its failure to meet a legal obligation

Question 28

what are the artificial legal persons

Answer 28

• limited liability partnerships
• corporation sole

Question 29

do articles of association have to be submitted to the registrar when forming a company

Answer 29

no

Question 30

what do changes in clauses in AoA require

Answer 30

a special resolution

Question 31

do private companies need to hold a general meeting to change their articles of association

Answer 31

no

Question 32

can public companies alter their articles by written resolution

Answer 32

no

Question 33

when may an alteration be void

Answer 33

if the majority who approve it are not acting bona fide in what they deem to be the interests of the company as a whole

Question 34

structure of remuneration committee

Answer 34

at least 3 NEDs

Question 35

what does non compliance with the UK Corp Gov Code result in?

Answer 35

• a civil liability created that directors may be sued for
• directors being liable for wrongful trading
• directors of non compliant companies may be disqualified from acting as a director for up to 5 years

Question 36

benefits of non executive directors

Answer 36

• Bring experience and knowledge that executive directors may not possess
• Can appreciate wider perspective when executive directors become involved in complex operational issues
• Provide the executive directors someone to confide in regarding any concerns with other board members

Question 37

what is the senior independent director

Answer 37

the title given to the non executive director to whom shareholders can contact outside of normal channels of communication