Question 1

One major role of independent directors is to:

Accepted Answer

Independent directors support **independent oversight**, improving fairness and reducing conflicts (concept).

Question 2

Which mechanism primarily helps strengthen fraud detection and reliability of reporting?

Accepted Answer

**Internal controls** and **audit** strengthen monitoring, preventing/detecting fraud (concept).

Question 3

What is insider trading?

Accepted Answer

a) Trading stocks based on non-public information

Question 4

Which of the following is NOT a factor that can influence ethical decision-making in business?

Accepted Answer

d) Customer preferences

Question 5

Which is an example of the "G" in ESG?

Accepted Answer

Governance (G) includes **board oversight**, controls, ethics and disclosures (concept).

Question 6

Which is an example of compliance/legal risk?

Accepted Answer

Compliance/legal risk arises when laws/regulations are not followed (concept).

Question 7

Which statement best describes the impact of corruption on business?

Accepted Answer

Corruption erodes **trust**, distorts competition, and increases legal/reputational risk (concept).

Question 8

Which ethical theory focuses on the inherent moral character of individuals?

Accepted Answer

b) Virtue ethics

Question 9

What does business ethics refer to?

Accepted Answer

c) Ethical decision-making in business

Question 10

Segregation of duties (maker-checker) is a type of:

Accepted Answer

Segregation of duties is a key **control activity** to reduce fraud/errors (concept).

Question 11

Which principle is most closely linked to timely and accurate disclosure of information?

Accepted Answer

**Transparency** requires timely, true and adequate disclosures (concept).

Question 12

A "code of conduct" in an organization is:

Accepted Answer

A **code of conduct** provides written guidance on expected behavior (e.g., gifts, conflicts, anti-bribery) (concept).

Question 13

Which ethical approach is based on the idea of duty and moral rules?

Accepted Answer

c) Deontology

Question 14

What does confidentiality mean in the context of business ethics?

Accepted Answer

b) Keeping sensitive information private and secure

Question 15

What is the term for the practice of hiring or promoting individuals based on factors unrelated to their qualifications and abilities?

Accepted Answer

d) Nepotism

Question 16

Internal audit generally focuses on:

Accepted Answer

Internal audit reviews **controls/processes** and supports governance and improvement (concept).

Question 17

A conflict of interest occurs when:

Accepted Answer

A **conflict of interest (COI)** arises when personal interest affects (or appears to affect) professional judgment (concept).

Question 18

The utilitarian principle is best summarized as:

Accepted Answer

Utilitarianism seeks the **greatest good for the greatest number** (concept).

Question 19

The main objective of an internal control system is to provide:

Accepted Answer

Internal controls provide **reasonable assurance** on reporting, compliance, assets and operations (concept).

Question 20

What does corporate philanthropy involve?

Accepted Answer

b) Donating company profits to charity

Question 21

Code of conduct is an example of an internal policy. (True/False)

Accepted Answer

True. A **code of conduct** is an internal policy describing expected ethical behavior (concept).

Question 22

Write one difference between privacy and security.

Accepted Answer

**Privacy** is proper use of personal data (consent/purpose), while **security** protects data from unauthorized access (concept).

Question 23

Transparency is a principle of corporate governance. (True/False)

Accepted Answer

True. **Transparency** means timely, true and adequate disclosure of information (concept).

Question 24

Virtue ethics focuses on character rather than consequences. (True/False)

Accepted Answer

True. **Virtue ethics** evaluates decisions based on the virtues/character of the decision-maker (concept).

Question 25

Write the meaning of a code of conduct (one line).

Accepted Answer

A **code of conduct** is a written set of guidelines stating acceptable and unacceptable behavior for employees in an organization (concept).

Question 26

Define independent director (one line).

Accepted Answer

An **independent director** is a non-executive director who is independent from management and can provide objective oversight (concept).

Question 27

Transparency test is an ethical test used in decision-making. (True/False)

Accepted Answer

True. The **transparency test** asks if you can justify the decision openly under public scrutiny (concept).

Question 28

Risk management is the process of identifying and controlling risks. (True/False)

Accepted Answer

True. **Risk management** involves identifying, assessing and controlling risks affecting objectives (concept).

Question 29

Write any one objective of corporate governance.

Accepted Answer

One objective is ensuring **accountability** of management/board and protecting investor confidence (any one) (concept).

Question 30

Dark patterns are unethical UI designs that manipulate users. (True/False)

Accepted Answer

True. **Dark patterns** reduce user autonomy and violate transparency/fairness (concept).

Question 31

Differentiate Companies Act (broad) and SEBI LODR (broad) in a table (any three points).

Accepted Answer

Basic differences (concept):

| Basis | Companies Act (broad) | **SEBI LODR** (broad) |
|---|---|---|
| Applicability | companies in general | **listed entities** |
| Focus | board duties, audits, compliance | **listing obligations** + **disclosures** |
| Purpose | accountability + legal compliance | investor protection + transparency |

Any three differences are sufficient.

Question 32

Explain greenwashing and write any three ways to prevent it (use a table).

Accepted Answer

**Greenwashing** means making misleading claims about environmental performance (concept).

Prevention (any three):

| Measure | How it helps (concept) |
|---|---|
| verified/assured reporting | improves credibility |
| clear KPIs and data | reduces vague claims |
| transparent disclosures | allows scrutiny |
| board oversight | accountability in ESG communication |

Write any three measures.

Question 33

List any three key mechanisms of corporate governance (use a small table).

Accepted Answer

Any three key mechanisms (concept):

| Mechanism | Role |
|---|---|
| **Board oversight** | monitors management and sets direction |
| Audit & **internal controls** | prevent/detect fraud and improve reporting |
| **Disclosures** | ensure transparency to investors/regulators |
| Policies/codes | code of conduct, whistleblowing (overview) |

Write any three with one-line role.

Question 34

Differentiate CSR, sustainability and ESG (any three points) using a table.

Accepted Answer

Differences (concept):

| Term | Focus | Meaning |
|---|---|---|
| **CSR** | social responsibility | ethical contribution to society |
| **Sustainability** | long-term balance | people/planet/profit over time |
| **ESG** | measurement framework | E/S/G factors to evaluate performance |

Any three differences are sufficient.

Question 35

Write any three examples of control activities (use bullet points).

Accepted Answer

Examples of control activities (any three) (concept):

- **approvals** and authorization limits
- segregation of duties (maker–checker)
- reconciliations (bank/vendor/customer)
- access controls and audit trails (overview)

Write any three examples.

Question 36

Explain data privacy and key principles (exam-style) using a table.

Accepted Answer

### Meaning
**Data privacy** is the right to control collection and use of personal information (concept).

### Key principles (table)

| Principle | Meaning (concept) |
|---|---|
| **Consent** | collect/use data with permission and lawful purpose |
| Purpose limitation | use only for stated purpose |
| Data minimization | collect only what is necessary |
| Transparency | clear notices and communication |
| Security safeguards | protect against unauthorized access (overview) |

Conclusion: Privacy principles protect rights and build trust in digital business (concept).

Question 37

Explain business ethics: meaning, nature and importance (exam-style).

Accepted Answer

### Meaning
**Business ethics** means applying **moral principles** (right and wrong) to business decisions and conduct (concept).

### Nature (any three)
- **Normative**: guides what ought to be done (concept)
- **Practical/applied**: used in real business situations (concept)
- **Dynamic**: evolves with society and technology (overview)
- **Stakeholder-oriented**: considers impacts on others (concept)

### Importance (any four)
- builds **trust** and reputation
- improves employee morale and discipline
- reduces unethical practices (fraud/bribery)
- supports long-term sustainability and good governance (concept)

Conclusion: Ethics strengthens responsible decision-making and supports sustainable success (concept).

Question 38

Explain governance framework in India: key components, board structure and independent directors (exam-style) with a table.

Accepted Answer

### Key components (overview)
India’s governance framework includes broad company law provisions (board duties, audits, compliance) and securities market rules for listed entities emphasizing **disclosures** (concept).

### Board structure and independence (table)

| Element | What it means | Why it matters (concept) |
|---|---|---|
| **Executive** directors | manage operations | operational insight |
| Non-executive directors | oversight role | monitoring and guidance |
| **Independent** directors | objective non-executives | reduces conflicts; protects minority shareholders |

Conclusion: Strong board independence improves transparency and accountability (concept).

Question 39

Explain CSR and sustainability: meaning and benefits (exam-style) with a table.

Accepted Answer

### Meaning
- **CSR**: ethical responsibility + contribution to social welfare (concept)
- **Sustainability**: long-term balance of resources and stakeholder interests (concept)

### Benefits (any four)
- improves **trust** and brand reputation
- improves employee engagement and retention
- reduces regulatory/legal risk (overview)
- long-term cost savings (energy and waste efficiency)
- better investor confidence (ESG focus) (overview)

### Quick table

| Area | Benefit (concept) |
|---|---|
| People | welfare, community trust |
| Planet | reduced pollution and waste |
| Profit | long-term resilience |

Conclusion: Responsible practices support sustainable growth (concept).

Question 40

Explain internal control components (control environment, risk assessment, control activities, communication, monitoring) with a table.

Accepted Answer

### Internal control components (concept)

| Component | What it means (concept) | Example |
|---|---|---|
| **Control environment** | tone at the top, ethics, responsibility | code of conduct, accountability |
| Risk assessment | identify/prioritize risks | risk register |
| Control activities | procedures to reduce risk | approvals, segregation |
| Communication | reporting/documentation | dashboards, SOPs |
| Monitoring | review effectiveness | internal audit, follow-up |

Conclusion: Components work together to reduce errors and fraud (concept).

Business Ethics and Corporate Governance — Question Paper

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