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CIMA C5 > Stuff To Add > Flashcards

Stuff To Add Flashcards

1
Q

European Commission

A

Formed of commissioners from member states- fulfil executive function

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2
Q

European Parliament

A

Members elected from member states- supervises other EU institutions.

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3
Q

European council

A

Formed of heads of states from member states.

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4
Q

European court of justice

A

Applies EU law and provides decisions and rulings that are binding on the parties in the case

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5
Q

Secondary sources of law in the EU

A

All have force of legislation
Regulation-become part of law of each member nation
Directives-issues to member states to change their law wishing a specified period. Issued by council and commission.
Decision-addressed to an entity (person/state/Company). Immediately binding.

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6
Q

Main bodies of the FEE

A

3
General assembly
Council
Executive

Involved in:
Money laundering
Banking and insurance
Company law

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7
Q

Courts structure

A 
Bottom-
1. Magistrates court
2. County Court
3. Crown Court
4.High Court
5.the Court of Appeal
6.the Supreme Court
7.the European Court of Justice
Top
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8
Q

Ratio decidendi + Obiter Dicta

A

For courts to bind they need to be binding by a higher court.

Rad: reason for decisions being made. these are binding.
0D: space comments made by deciding judge in passing.

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9
Q

Shariah law

Forbidden things

A

Apostasy-conversion to another religion.
Blasphemy- criticism of the Prophet Muhammad.
Diet-pork is prohibited.

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10
Q

Types of threat (CIMA guidelines)

A

Self-interest: obvious
Self-review: error due to bad re-evaluation of own or colleagues work.
Advocacy: Risk that an accountant promotes a clients position too much.
Familiarity: long or close relationship with client. Too ready to be nice/accept
Intimidation: put lots of pressure on them.

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11
Q

Vicarious liability

A

Liability for torts of others because of relationship.

Arises:

  1. Relationship employer-employee.
  2. Employees tort during employment.
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12
Q

Notice of dismissal

A

One month-2 years: 1 week minimum
2-12 years: 1 week per year
12 years+ : 12 weeks

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13
Q

Time off work

A

Employees Allowed for:

Trade union duties 
If redundant -look for other job
If Trade union official-paid time off
If for public duties- iE army/magistrate
Employees suspended on medical grounds
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14
Q

Sick pay

A

Pay employees for up to 28 weeks.

Paid for time of whilst recovering from occupational disease.

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15
Q

Limited liability partnership requirements:

A

Files notices with registrar, such as when members leave and an annual return.
Sign file accounts
Assign auditors if appropriate

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16
Q

Promoter duties and rights

A

Promoter is person who Forms a company.

Duty to

  1. Account of any benefits he gets
  2. Not put themselves in a position of conflict
  3. Provide full info on all transactions

Avoid liability by:

  1. Draft contract before company is formed
  2. If finalised, allowe for novation(new contract that overrides)
  3. Can buy off the shelf company
  4. Form company ahead of business activities.
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17
Q

Ultra vires

A

Means beyond capacity.

Scenario 1:
An act restricted by the company’s objects permitted by a director.
This is allowed if third party acted in good faith.
ALSO
Scenario 2:
When delegates legislation is declared to be void. Because delegates body abused power.
Beyond c

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18
Q

Professional qualities of an accountant:

A
  1. Independence: “independent mind”
    Ignoring things that don’t affect completion of work
  2. Scepticism(not taking things at face value)
    Question information given to them
    Makes sense? Other supporting? Where did it come from? Why was it given to me?
  3. Accountability
    Accountable for judgements and decisions
  4. Social responsibility
    Integrity/respect/courtesy/due care
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19
Q

Board structures in different countries

A

Mainly Unitary: UK and USA

Mainly Two tier board: France and Germany.
1 supervisory
Responsible for: safeguarding stakeholder interests
2 management comittee
Responsible for: independently running the business/meets regulation/prepares resolution/provides financial services stements.

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20
Q

IFAC: International Federation of accountants

A

Mission: to develop high standards of professional accountants and enhance quality of services.

Ethical standards.

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21
Q

International standardisation organisation (ISO)

A

Business process standardisation.

Largest issuer of international standards.
With members from 162 countries.

You can be ISO:
Certified/registered
Compliant

To do with process.

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22
Q

Tort

A

Tort-a civil wrong. Can be sued for compensation/damages.

Can be complete strangers.

Not a breach of contract.
Not a crime.

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23
Q

A representation

A

Statement or fact made by one party to the other before the contract, and made to induce the other part to enter into it.

Misrepresentation- same as above but false.

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24
Q

Contra Proferentum rule.

A

“Against he who is relying”

If an exclusion clause is unclear, it will be interpreted against person relying on it.

Because liability can only be excluded by clear words.

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25
Q

Statement of Written Particulars:

A

“Contract” must be given within two months of beginning. Any changes should be notified within 1 month.

Include:
Name of ee and er 
Date of start
Service from previous employer part of this employment.
Pay
I was in place of work
Any holiday
Sick leave
Pensions
Length of notice
Title job
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26
Q

Written resolution

A 
Any decision 
By private company 
can pass
 except 
removing a director or an auditor before the term of office has expired.
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27
Q

Directors

A

Statutory duties:
Act within their powers
Promote the success of the company
Exercise independent judgement
Exercise reasonable skill, care, diligence
Avoid conflicts of interest
Not to accept benefits from third parties
Declare an interest in proposed transaction

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28
Q

Types of directors

Number of directors

A

5

  1. Shadow directors-avoid legal responsibility.
  2. Alternate directors-vote/attend on behave of another.
  3. Executive directors-performs specific role.
  4. Non-executive directors-not perform in general management.
  5. Managing director-carries out day to day activities.
#: 
Every company at least 1
Public: minimum is 2. 
Minimum 1 real person.
Company can be a director-sends one member to represent company-(for board meeting etc.
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29
Q

Powers of a managing director

A

CEO MD same thing in CIMA exam

MD has apparent authority, actual authority is whatever the board gives them.

No other director has this authority.

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30
Q

Rule of majority

A

Minorities are unable to sue on behalf of the company.
The company should see you on behalf the company through majority of its shareholders.

Exceptions(minorities can sue)

  1. company is acting illegally.
  2. Majority shareholders are committing a fraud against the company.
  3. where an individual’s rights are being infringed.
  4. Where directors benefit from their own negligence.
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31
Q

Unfairly prejudicial Conduct

A

Main2:
Exclusion of a director.
Discrimination against minority

Any member can apply to court.

Court can do whatever it deems fit

32
Q

Class rights

A

It is possible to alter class rights:

  1. The articles must allow for variation
  2. Agreement of 75% of that class of shareholder.

Can be challenged by minority interests: 15% within 21 days.

Special rights:
Dividends
Return of capital
Voting
The right to appoint remove director.
33
Q

Governments investigation.

A 
For minority protection.
Appoint inspector for:
Affairs of a company
Ownership of a company 
Suspected infringement by directors 
Suspected insider dealing.
It may appoint inspector if:
1. Company itself applies
2. Members:
No less then 200 in mement
Hold 1/10 of issues shares
If no shares, at least 1/5 of members. 
3. If unlawful affairs.
34
Q

Financial assistance

A 
A company to give assistance to a third party to buy it shares.
Ie:
Loaning money
Acting as guarantor of a loan
Purchasing assets at over value.

This is not allowed in a public company.

Exceptions:
If purchasing shares is not main purpose of transaction
If it is a bank
If it is for benefit of genuine enployees-(directors are not genuine employees)

35
Q

Reducing share capital

A 
Private company:
Court not needed
Special resolution
Statement of solvency within 15 days
Copy sent to registrar.

Public needs court approval + member/creditor can object.

36
Q

Dividends distributable.

A

Difference between net assets - (share capital + Undistributable reserves.

Undistributed reserves:
Share Premium account
Capital redemption reserve
Revaluation Reserve
Any reserve restricted be the articles.
37
Q

Redemption and purchase by a company of its own shares.

A 
A company cannot acquire its own shares.
Exceptions:
1. A quarter order
2. Redeemable shares
3.under specific procedures
38
Q

FRC

A

Financial Reporting Council
UK
Has lead role in ethical reporting
Monitors accountability of prof acc.

Work is undertaken by two sub bodies:

(POB) The professional oversight board for accountants. (Regulates specific activities: registration/training/cpd/discipline)

(APB) The auditing practices board.
(Mainly about auditing practices: standards UK/advice/international legislation/public understanding)

39
Q

IFAC

A

International Federation of Accountants (IFAC)

Published:

Code of ethics for professional accountants.

4parts:
PartA: General application
PartB: prof acc. In public practise
PartC: prof acc. In business

40
Q

The seven principles of public life

A
  1. Selflessness: act in interest of public
  2. Integrity: avoid actions that would put them in a position of influence
  3. Objectivity: choices should be based on merit.
  4. Accountability: responsible for actions
  5. Open about actions and decisions.
  6. Honesty: share private interest
  7. Leadership: show example and follow 6 rules.
41
Q

CIMA’s personal development cycle.

A 
Define-current + desired roles
Assess-find knowledge gaps
Design-learning program
Act-do the learnings activity
Reflect-what was learnt
Evaluate-actual development vs objectives
42
Q

Confidentiality

A

Care must be taken not to share info.

Exceptions:
Permitted by law
Authorised by client or employer
Required by law
Permitted by professional duty or right.(protect accountant in an investigation)
43
Q

King report

A

South Africa’s attempt to deal with corporate governance issues

44
Q

Symptoms of poor corporate governance

A

1.domination by a single individual

2.

45
Q

Promissory Estoppel

A

If someone makes s promise, (unsupported by consideration), intended to be binding and acted upon, other party relies or acts on it. Then 1st party is estopped to retract promise. Unless party 2 can be restored to original position.

46
Q

Corporates Governance

A

Effects of good governance:
Effective controls over operations
Business efficacy
Management are held accountable

47
Q

Acceptance of an offer

A

Not effective unless communicated to offerer.

Unless postal rule: as soon as posted,

48
Q

Capari decision

A

Auditors do not owe a duty of care to the public at large who rely on the info for investment decisions.

49
Q

Duty of care during take over bids

A

A higher duty of care is expected when giving advice on company takeovers then when advising on an audit.

50
Q

Essentials of a contract

A

Agreement
Consideration
Intention

51
Q

Binding in honour

A

Express denial of intention to create legal relations.

52
Q

Condition

A

Gives the right to damages and repudiate contract.

53
Q

Warranty

A

Gives right to claim for damages

54
Q

Consumer

A

A part to a contract deals as a consumer if:
He neither makes the contract in the course of a business nor holds himself as doing so and
The other party holds himself as going so and
Goods are ordinarily supplied for practice use or consumption.

55
Q

An injunction

A

Purpose:

To enforce a negative restraint in a contract.

56
Q

Termination by notice

A

Cannot be less then the contract.
If non given: reasonable notice.

Can be given without reason-unless contract requires otherwise.

57
Q

Termination by dismissal

A

Summary dismissal and constructive dismissal are ones without proper notice.

Summary: not proper notice (employee bad)

Constructive: employee resigns (employer bad)

58
Q

Wrongful dismissal

A

When summary dismissal is unjustified.

Remedy: damages based on loss of earnings.

59
Q

Unfair dismissal.

A

Need:
Employed for 2 year
Dismissed

Remedy: what would have been earned if proper notice had been given.

60
Q

Limited liability companies

A

Limited by shares:
Only amount unpaid by shares
Limited by guarantee:
Constitution states how much each member will pay.

61
Q

Unlimited liability

A

Can only be private.

62
Q

Public and Private companies

A

Public:
Registered with registrar.
£50,000 minimum capital
Raise capital by selling shares 2 public.
6 months to to produce accounts.
Must obtain trading certificate, before trading.

Private: cannot offer securities to public. Companies limited by guarantee and that are unlimited can only be private.
No minimum capital
Cannot sell shares to public.
9 months to produce accounts.

63
Q

Retirement of directors.

A

In the model article for public companies:

  1. Every year half should retire
  2. Retiring directors can be re-elected
  3. Longest in first out.
  4. Appointed mid year + not interested in re-election: not included in Calc for those required to be re-elected.

At first AGM: all retire

64
Q

Quorum

A

Minimum number of members at a meeting.

If undecided this is 2.

65
Q

Rules for calling a general meeting

A

Share holding
Public: 10% of paid up
Private: 5 or 10%
Requisition: signed with registered office or send by email with objective
Date:
Notice of info on meeting must be sent out within 21 days of requisition.
Meeting must be held within 28 days of the notice.

66
Q

Registration of charges

A

Must be registered within 21 days of creation by the registrar.
Rectification: court can extend registration of error made by mistake.
Failure to deliver particulars: mistake is responsibility of company-so fine.
On time correctly registered has priority over earlier charge filled late.
Company must keep copy if documents creating charge.

67
Q

Disadvantages of floating charges

A

Cannot be certain which asset will form security until crystallisation.
Even crystallisation, others come 1st:
Creditor/landlord
Preferential debts
Holder of a fixed charge
Creditor retains legal ownership until paid.

May be automatically invalid if created and the company is bankrupt after 12m/1y.

68
Q

Performance of the contract

A

Discharge by performance:
Only by complete and exact performance.

Exceptions
Substantial performance

69
Q

Maternity leave

Time

A

52 weeks

70
Q

Paternity leave time

A

1-2 weeks within 56 days of birth

71
Q

Documents a company needs to send to registrar

A 
Applications for registration
1 name
2. Location of reg office (Wales, eng..)
3. Limited by shares or guarantee
4. Private or public
5. Intends address of reg office
Memorandum
Statement Proposed officers
Statement of compliance
Statement of capital and initial shareholdings/ or guarantee
Few
72
Q

Registration number?

A

Given to company when incorporated (after documents are sent in.

73
Q

CIMA fundamental principles:

A

Integrity (straightforward/consistent)
Objectivity
Professional competence and due care
Confidentiality

74
Q

Treasury shares

Deferred shares

A

T: when a Plc is allowed to purchase its own shares out of distributable profit. Up to 10% allowed. And can issue these easily.

75
Q

Deferred shares

A

Paid after preference and ordinary shares get the %

76
Q

Public company allotment of shares

A

Public offer: public subscribes directly to the company

Offer for sale: offer to public to apply for shares based on prospectus

Placing: small number large blocks to people or institutions, who have previously agreed a price.

77
Q

What causes crystallisation of a floating charge?

A 
Liquidation
Cessation of the company's business
Active intervention of chargee
Charge contract
Crystallisations of another floating charge if it stops the business,

CIMA C5 (4 decks)

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