Test: BA4 sample questions

Test your knowledge of the Code and ethical conflict resolution with these sample questions on ethics from past BA4 exam. Remember that the BA4 exam also covers corporate governance and business law. When considering governance and legal areas you should always reflect on the application of the Code.



Which of the following best describes corporate governance?

It is the system by which:



Correct answer: c)

Corporate governance is the system by which companies are directed and controlled. This can be through, both internal regulation (e.g. the directors managing the company and the shareholders appointing the directors and auditors), as well as external regulation (eg Listing Rules) or the law.


Which of the following statements is correct in relation to Principles of Corporate Governance (“the Principles”) produced by the Organisation for Economic Co-operation and Development (OECD)?


Correct answer: d)

The Principles were intended to assist member and non-member governments in their efforts to evaluate and improve the legal, institutional and regulatory framework for corporate governance in their countries as well as provide guidance and suggestions for stock exchange investors, corporations and other parties that have a role in the process of developing good corporate governance.


Which of the following is an advantage of adopting a framework approach to ethics?


Correct answer: a)

It is impossible to define every situation that creates threats to compliance with the fundamental principles of the Code of Ethics so a framework approach allows the accountant to identify and evaluate each threat as it arises and determine the appropriate response. This framework approach can therefore be applied more easily to new developments in business practice and to unique cases.


Members of the accountancy profession need, or need to develop, certain qualities and values in order to meet the expectations of CIMA and the public. This requirement is related to which of the following approaches to ethics?


Correct answer: d)

Virtue ethics holds that certain qualities and values (e.g. reliability and responsibility) are dispositions to act in ways that benefit society as well as the individual. These are the qualities and values which are vital to the accountancy profession and are required among all professionals.


One of the fundamental ethical principles with which CIMA members must comply is ‘objectivity’. Objectivity requires that accountants have the ability to:


Correct answer: b)

CIMA members must not allow bias, conflict of interest or undue influence of others to override their professional or business judgements and thus they must maintain an impartial attitude in order to demonstrate objectivity.


BB has been working as a manager on the audit of Q Ltd, a jewellery manufacturer. She has just completed the audit work on the company’s latest financial statements. The Chief Executive of the company was very impressed with her work. Which of the following actions by the Chief Executive would impair BB’s independence from Q Ltd.


Correct answer: b)

The gold watch is a significant gift to give to BB, the recipient, and therefore could impact, or be perceived to impact, her independence.


When a professional accountant encounters a conflict of interest between his or her professional and personal life, the correct immediate course of action is to:


Correct answer: b)

A professional accountant must respond to an ethical conflict. Inaction or silence is not acceptable and indeed may be a further breach so the accountant must first of all declare that a conflict of interest exists.


Internal auditors are responsible for reporting fraud to senior management when:


Correct answer: d)

Internal auditors must report potentially fraudulent transactions to senior management as soon as possible rather than delay reporting until their existence has been established.


Having good CSR can enhance the reputation of a company’s brand only if:


Correct answer: b)

If the public know about the CSR and it can be used as a basis for differentiation, many customers may prefer to trade with a company they feel is ethical. However, if the public do not know about it, or do not believe it to be the case, it will have no effect on a company's reputation.


FF is a manufacturing company that prides itself on its ethical approach to the environment. Which of the following would NOT be a reason for FF to carry out an environmental audit of its suppliers?


Correct answer: d)

An environmental audit is an evaluation of how well the organisations, the management and equipment are performing with the aim of contributing to safeguarding the environment by focusing on management control of environmental practices and assessing compliance with company policies. This would not include focusing on the cost of production by a supplier (which would be more appropriate to a social audit or CSR policy).

You can now review other resources and support for further guidance and learning related to the Code. View Resources ›

This tool is produced to assist students’ understanding of professional ethics in exams and in their working lives. The Student Ethics Support Tool is not a substitute for CIMA study texts, but a support to your studies.