Question 1

Which is an example of compliance/legal risk?

Accepted Answer

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

Question 2

Companies Act governance provisions generally relate to:

Accepted Answer

Company law provisions support board oversight, **audits**, compliance and **disclosures** (overview).

Question 3

An effective whistleblowing mechanism helps by:

Accepted Answer

Whistleblowing supports **early detection** and strengthens **accountability** if protected from retaliation (concept).

Question 4

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

Accepted Answer

Social (S) covers **employee welfare**, diversity, customer safety and community impact (concept).

Question 5

The stakeholder approach suggests that companies should:

Accepted Answer

Stakeholder approach emphasizes responsibilities to **multiple stakeholder groups** (concept).

Question 6

Responsible innovation mainly means:

Accepted Answer

Responsible innovation anticipates risks and includes **safeguards**, stakeholder input and continuous improvement (concept).

Question 7

Utilitarianism is primarily a ______ theory.

Accepted Answer

Utilitarianism judges actions by **outcomes/consequences** (concept).

Question 8

Which concept describes the pattern: Pressure + Opportunity + Rationalization?

Accepted Answer

The **fraud triangle** explains why fraud occurs: pressure, opportunity and rationalization (overview).

Question 9

The main objective of corporate governance is to ensure:

Accepted Answer

Governance aims for **accountability**, protecting investors and other stakeholders (concept).

Question 10

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

Accepted Answer

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

Question 11

A corporate scandal usually involves:

Accepted Answer

Scandals involve **unethical/illegal conduct** (fraud, bribery, manipulation) leading to major losses and trust erosion (concept).

Question 12

Separation of ownership and management increases the need for corporate governance because:

Accepted Answer

With separation, monitoring is needed to reduce **agency conflicts** (concept).

Question 13

Which is a key privacy principle?

Accepted Answer

Privacy principles include **consent**, purpose limitation, data minimization and transparency (concept).

Question 14

AI ethics issues commonly include:

Accepted Answer

AI ethics covers **bias**, transparency/explainability, accountability, privacy and safety (concept).

Question 15

A key governance principle most closely linked to timely, adequate disclosures is:

Accepted Answer

**Transparency** requires timely and accurate disclosures to stakeholders (concept).

Question 16

Business ethics mainly deals with:

Accepted Answer

Business ethics applies **moral standards** to business behavior and decisions (concept).

Question 17

An ethical dilemma occurs when:

Accepted Answer

Ethical dilemmas involve **conflicting values** (e.g., profit vs safety) with no easy answer (concept).

Question 18

Which statement best distinguishes privacy and security?

Accepted Answer

**Privacy** concerns appropriate use/consent; **security** concerns protection from unauthorized access (concept).

Question 19

The stakeholders’ relationship committee typically deals with:

Accepted Answer

It helps address **shareholder/investor grievances** and improves communication (overview).

Question 20

Which of the following is a key importance of business ethics?

Accepted Answer

Ethics builds **trust**, strengthens **reputation**, and supports sustainable performance (concept).

Question 21

Greenwashing means false sustainability claims. (True/False)

Accepted Answer

True. **Greenwashing** refers to misleading claims about environmental/sustainability performance (concept).

Question 22

Internal control provides reasonable assurance, not absolute assurance. (True/False)

Accepted Answer

True. Internal controls provide **reasonable assurance** because no system can eliminate all risk (concept).

Question 23

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 24

Define a board committee (one line).

Accepted Answer

A **board committee** is a smaller group of directors formed to provide specialized oversight and detailed review in specific areas (concept).

Question 25

What is deontology? (One line.)

Accepted Answer

Deontology is a **duty/rights-based** approach where actions are judged by rules and duties, not only by outcomes (concept).

Question 26

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

Accepted Answer

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

Question 27

Consent is a key principle of data privacy. (True/False)

Accepted Answer

True. **Consent** and purpose limitation are key privacy principles for lawful and fair processing (concept).

Question 28

Stakeholder approach focuses only on shareholders. (True/False)

Accepted Answer

False. The **stakeholder approach** considers responsibilities to employees, customers, suppliers, government and society along with shareholders (concept).

Question 29

Define utilitarianism.

Accepted Answer

Utilitarianism is a **consequence-based** theory which says an action is ethical if it produces the **greatest overall good** for the greatest number (concept).

Question 30

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 31

List any three key governance mechanisms used in India (use a small table).

Accepted Answer

Any three governance mechanisms (concept):

| Mechanism | Purpose |
|---|---|
| **Board & committees** | oversight and monitoring |
| **Internal controls & audit** | prevent/detect fraud; reliable reporting |
| **Disclosures** (listed entities) | transparency and investor protection |
| RPT approvals | manage conflicts of interest |

Write any three with one-line purpose.

Question 32

List the steps in ethical decision-making and draw a simple flowchart (any six steps).

Accepted Answer

Steps (any six):
- identify issue and facts
- identify **stakeholders**
- list alternatives
- check legality (minimum)
- apply ethical tests (rights/fairness/harm/transparency)
- evaluate consequences
- decide and document reasons
- review outcomes (concept)

Flowchart:

```text
Issue/Facts -> Stakeholders -> Options -> Tests/Consequences -> Decision -> Review
```

Question 33

Explain Triple Bottom Line (TBL) model with a table (People–Planet–Profit).

Accepted Answer

TBL evaluates performance on three dimensions (concept):

| Dimension | What it covers | Example |
|---|---|---|
| **People** | social impact | employee welfare, community |
| **Planet** | environment impact | waste reduction, energy efficiency |
| **Profit** | economic performance | long-term profitability |

Write the three dimensions with examples.

Question 34

Discuss ethical risks in digital business and propose preventive measures (privacy, security and governance) with a table.

Accepted Answer

### Ethical risks (concept)
Digital business risks include data misuse, breaches, AI bias, fraud and misinformation.

| Risk | Preventive measure (concept) |
|---|---|
| **Data misuse** | consent + purpose limitation + minimization |
| **Data breach** | MFA, encryption, incident response |
| AI bias | bias testing + human oversight |
| Misinformation | verification + transparent corrections |

Conclusion: Policies + controls + monitoring protect stakeholders and trust in digital platforms (concept).

Question 35

Write key functions of Audit Committee (any three points).

Accepted Answer

Any three functions (concept):

- review financial statements and accounting policies
- oversee **internal controls** and internal audit
- recommend appointment/remuneration of external auditors (overview)
- monitor audit findings and management responses
- investigate financial irregularities and compliance issues (overview)

Write any three points.

Question 36

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).

Question 37

Explain utilitarianism, deontology and virtue ethics with a comparison table (exam-style).

Accepted Answer

### Meaning (brief)
- **Utilitarianism**: ethics based on **consequences** (maximize overall good) (concept)
- **Deontology**: ethics based on **duties/rights** (follow what is right) (concept)
- **Virtue ethics**: ethics based on **character/virtues** (integrity, fairness) (concept)

### Comparison table

| Basis | **Utilitarianism** | **Deontology** | **Virtue ethics** |
|---|---|---|---|
| Focus | outcomes | duties/rights | character |
| Key question | greatest overall good? | is it right/duty? | what would a virtuous person do? |
| Strength | practical trade-offs | protects rights | builds culture |
| Limitation | may harm minority | can be rigid | less specific |

Conclusion: Using multiple lenses improves ethical reasoning and justification (concept).

Question 38

Explain ethical culture in organizations and how it is built (tone at the top, code, training, rewards and whistleblowing) with a table.

Accepted Answer

### Meaning
An **ethical culture** is a workplace environment where doing the right thing is expected, supported and rewarded (concept).

### How it is built (table)

| Element | What it means | Practical example (concept) |
|---|---|---|
| **Tone at the top** | leaders model ethics | leaders refuse bribes and act transparently |
| **Code of conduct** | written guidance | gift limits, conflict-of-interest rules |
| Training & communication | awareness and clarity | onboarding ethics training |
| Rewards & discipline | align incentives | reward ethical behavior; penalize violations |
| Whistleblowing | safe reporting channels | anonymous hotline + protection |

Conclusion: Strong culture reduces misconduct and supports trust and governance (concept).

Question 39

Explain social media ethics and responsible communication (exam-style) and add a simple flowchart for content governance.

Accepted Answer

### Social media ethics (concept)
Ethical issues include misleading ads, hidden sponsorships, misinformation and reputational harm.

Guidelines (any four):
- disclose paid partnerships clearly (**transparency**)
- avoid misleading claims; verify information
- respect privacy in messages and customer data
- respond respectfully; correct mistakes publicly (concept)

Flowchart:

```text
Create content -> Verify claims -> Approve/disclose -> Publish -> Monitor feedback -> Correct/learn
```

Question 40

Discuss AI ethics and suggest controls for responsible AI governance (exam-style) with a table.

Accepted Answer

### AI ethics issues (brief)
Key issues include **bias**, lack of transparency, accountability for harm, and privacy risks (concept).

### Controls for responsible AI (table)

| Control | Purpose (concept) |
|---|---|
| **Bias testing/audits** | reduce discrimination |
| Explainability | justify decisions affecting rights |
| Human oversight | review high-risk decisions |
| Documentation | model governance and traceability |
| Monitoring | detect drift and harmful outcomes (overview) |

Conclusion: Responsible AI requires governance, oversight and continuous monitoring (concept).

Business Ethics and Corporate Governance — Question Paper

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