ACFE Corporate Governance and Ethics 4

Question 1

A compliance officer discovers that the CFO is circumventing internal controls. What is the MOST appropriate initial action?

Accepted Answer

Escalate to the audit committee or board, bypassing the CFO

Answer

When suspected misconduct involves a senior executive, proper escalation goes around that executive to the board or audit committee, which has oversight authority.

Question 2

The duty of loyalty requires corporate directors to:

Accepted Answer

Act in the best interests of the corporation rather than personal interests

Answer

The duty of loyalty requires directors to prioritize the corporation's best interests over their own personal financial interests or those of other parties.

Question 3

Which type of audit committee independence concern arises when a committee member receives consulting fees from the company?

Accepted Answer

Material relationship that compromises independence

Answer

Receiving consulting fees creates a material financial relationship between the director and the company, which compromises audit committee independence.

Question 4

Under the Business Judgment Rule, courts will generally NOT second-guess a board decision if directors:

Accepted Answer

Made the decision in good faith, on an informed basis, and without conflicts of interest

Answer

The Business Judgment Rule protects directors who acted in good faith, were adequately informed, and had no personal interest in the outcome.

Question 5

Which statement BEST describes the role of internal audit in corporate governance?

Accepted Answer

Internal audit provides independent assurance on risk management and controls

Answer

Internal audit provides independent, objective assurance to the board and management on the effectiveness of governance, risk management, and internal controls.

(ACFE) Association of Certified Fraud Examiners Practice Test

(ACFE) Association of Certified Fraud Examiners Practice Test

ACFE Corporate Governance and Ethics 4