Business Ethics Issues: Bribery, Corruption, Fraud, Insider Trading, Conflict of Interest and Whistleblowing (Overview) Questions

Question 1

Whistleblowing is reporting misconduct through appropriate channels. (True/False)

Accepted Answer

True. **Whistleblowing** is reporting unethical/illegal activities through proper internal or external channels (concept).

Question 2

Define bribery.

Accepted Answer

**Bribery** is offering, giving, receiving or soliciting something of value to influence a decision unfairly (concept).

Question 3

Corruption means abuse of entrusted power for private gain. (True/False)

Accepted Answer

True. **Corruption** is abuse of entrusted power for private gain (concept).

Question 4

Define fraud (one line).

Accepted Answer

**Fraud** is intentional deception to obtain an unfair or unlawful benefit (concept).

Question 5

Insider trading involves trading using unpublished price-sensitive information (UPSI). (True/False)

Accepted Answer

True. **Insider trading** uses **UPSI**, which harms market fairness and investor trust (concept).

Question 6

What is conflict of interest (COI)? (One line.)

Accepted Answer

A **conflict of interest** occurs when personal interests interfere (or appear to interfere) with professional duty and objective judgment (concept).

Question 7

Differentiate bribery, corruption and fraud (any three points) using a table.

Accepted Answer

Differences (concept):

| Issue | Core idea | Example |
|---|---|---|
| **Bribery** | undue payment to influence decision | cash/gift to win tender |
| **Corruption** | abuse of power for gain | kickbacks, favoritism |
| **Fraud** | deception for gain | fake invoices, misreporting |

Any three differences/examples are sufficient.

Question 8

Explain insider trading and why it is unethical (any three points).

Accepted Answer

**Insider trading** is trading in securities using **unpublished price-sensitive information (UPSI)** (concept).

Why unethical (any three):
- gives unfair advantage; violates **fairness**
- harms market integrity and investor confidence
- violates transparency and governance norms; can be illegal (concept)

Write any three points.

Question 9

Explain conflict of interest (COI) with any three examples (use a table).

Accepted Answer

COI arises when personal interest affects duty (concept). Examples:

| COI situation | Why it is a conflict (concept) |
|---|---|
| awarding contract to relative’s firm | biased decision-making |
| accepting expensive gifts from vendors | influences procurement decisions |
| director has hidden interest in a transaction | self-dealing risk |

Write any three examples.

Question 10

Write any three fraud red flags and any three preventive controls (use a table).

Accepted Answer

Red flags and controls (overview):

| Fraud red flag | Preventive control (concept) |
|---|---|
| duplicate invoices/unusual vendor payments | segregation of duties + approvals |
| override of controls | audit trails + management review |
| pressure to meet targets | balanced incentives + ethics oversight |

Write any three red flags and matching controls.

Question 11

Explain whistleblowing and write any three safeguards for an effective whistleblowing system (exam points).

Accepted Answer

**Whistleblowing** means reporting unethical/illegal conduct to appropriate authorities (internal or external) (concept).

Safeguards (any three):
- **confidentiality** of identity and information
- protection from retaliation (non-victimization)
- clear reporting channels (hotline/portal) and quick acknowledgement
- independent and fair investigation process (concept)

Write any three points.

Question 12

List any three preventive measures to control bribery and corruption in organizations (use a table).

Accepted Answer

Any three preventive measures (concept):

| Area | Measure |
|---|---|
| Policy | **anti-bribery** policy, gift limits, approvals |
| Process | transparent procurement + vendor due diligence |
| Control | segregation of duties + audit trails |
| Culture | tone at the top + training (overview) |

Write any three points.

Question 13

Explain bribery and corruption: impact on business and preventive measures (exam-style) with a table.

Accepted Answer

### Meaning (brief)
- **Bribery**: undue payment to influence decisions
- **Corruption**: abuse of entrusted power for private gain (concept)

### Impact on business (any four)
- damages **trust** and reputation
- increases costs and distorts competition
- leads to legal penalties and governance failure
- reduces quality outcomes (contracts won unfairly) (overview)

### Prevention (table)

| Area | Measure (concept) |
|---|---|
| Policy | anti-bribery policy, gift limits, approvals |
| Controls | segregation of duties, vendor due diligence |
| Detection | audits, monitoring, reporting channels |
| Culture | tone at the top, training |

Conclusion: Strong controls and culture reduce corruption risks and protect stakeholders (concept).

Question 14

Explain whistleblowing: meaning, importance and safeguards (exam-style) with a flowchart.

Accepted Answer

### Meaning
**Whistleblowing** is reporting unethical/illegal activities to appropriate authorities (internal or external) (concept).

### Importance (any four)
- early detection of fraud and misconduct
- strengthens **accountability** and ethical culture
- protects stakeholders and reputation
- improves governance and compliance (overview)

### Safeguards (any four)
- confidentiality and protection from retaliation
- clear reporting channels (hotline/portal)
- independent investigation process
- timely action and feedback (concept)

Flowchart:

```text
Observe misconduct -> Report via channel -> Investigation -> Action/Discipline -> Protection & closure
```

Question 15

Explain fraud: types, causes and preventive controls (exam-style) using a table.

Accepted Answer

### Fraud (meaning)
**Fraud** is intentional deception for unfair/unlawful gain (concept).

### Types and controls (table)

| Type | Example | Control (concept) |
|---|---|---|
| Asset misappropriation | fake invoices, theft | approvals + segregation of duties |
| Financial misreporting | manipulating results | strong audit + review |
| Corruption-related | kickbacks | vendor due diligence + monitoring |

### Causes (any three)
- pressure (targets), opportunity (weak controls), rationalization (overview)

Conclusion: Controls + audit + ethical culture reduce opportunity and deter fraud (concept).

Issue	Core idea	Example
Bribery	undue payment to influence decision	cash/gift to win tender
Corruption	abuse of power for gain	kickbacks, favoritism
Fraud	deception for gain	fake invoices, misreporting

Business Ethics Issues: Bribery, Corruption, Fraud, Insider Trading, Conflict of Interest and Whistleblowing (Overview)

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