Ethics and Corporate Governance Flashcards
7 cards from real ACCA AS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethics and Corporate Governance flashcards as text
According to the IESBA Code of Ethics, which of the following is NOT one of the five fundamental principles of professional ethics?
Answer: Profitability
The five fundamental principles are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour — profitability is not included.
The agency problem in corporate governance refers to which of the following situations?
Answer: Conflicts arising from the separation of ownership and control between shareholders and directors
The agency problem occurs because directors (agents) may pursue their own interests rather than those of shareholders (principals) due to the separation of ownership and control.
Which UK corporate governance report first introduced the 'comply or explain' approach to governance codes?
Answer: The Cadbury Report (1992)
The Cadbury Report (1992) introduced the 'comply or explain' principle, which forms the foundation of the UK Corporate Governance Code.
Which of the following best describes a unitary board structure?
Answer: A single board containing both executive and non-executive directors
A unitary board, as used in the UK, is a single board that includes both executive directors who manage the company and non-executive directors who provide oversight.
Under the UK Corporate Governance Code, what is the recommended minimum proportion of independent non-executive directors on a FTSE 350 company board (excluding the chair)?
Answer: At least half of the board
The UK Corporate Governance Code recommends that at least half the board, excluding the chair, of a FTSE 350 company should comprise independent non-executive directors.
Which ethical framework judges the morality of an action solely based on its outcomes or consequences?
Answer: Consequentialism
Consequentialism determines the rightness or wrongness of actions based on their outcomes; utilitarianism, which seeks the greatest good for the greatest number, is its most common form.
The concept of 'enlightened shareholder value' embedded in the UK Companies Act 2006 (s172) requires directors to:
Answer: Promote the long-term success of the company for shareholders while having regard to wider stakeholder interests
Section 172 of the Companies Act 2006 requires directors to act in the way most likely to promote the company's long-term success for its members, while having regard to employees, suppliers, community, and the environment.