Ethics & Corporate Governance Flashcards

A company's compliance program includes policies, but a risk assessment has never been conducted. Which fundamental program element is missing?

Answer: Risk assessment

The DOJ and SEC regard periodic risk assessments as foundational — without identifying and prioritizing risks, other program elements cannot be properly tailored.

Which principle from the OECD Guidelines for Multinational Enterprises relates most directly to corporate governance transparency?

Answer: Disclosure of material information to shareholders and the public in a timely manner

The OECD Guidelines emphasize timely and accurate disclosure of material information on financial performance, ownership, and governance as a core transparency principle.

Under the concept of 'corporate culture' in compliance, what does a 'speak-up culture' primarily aim to achieve?

Answer: Encouraging employees to raise concerns without fear of retaliation

A speak-up culture creates psychological safety so employees report concerns internally, enabling the organization to detect and remediate issues before they escalate.

A company provides a lavish resort trip to a government procurement officer before a contract decision. Under the FCPA's antibribery provisions, this is most likely:

Answer: Prohibited because the intent is to influence an official act

The FCPA prohibits giving anything of value to a foreign official to influence an official act, and lavish entertainment provided to influence a contract award meets that standard regardless of dollar amount.

Which fiduciary duty requires directors to act on an informed basis after adequate deliberation before making a business decision?

Answer: Duty of care

The duty of care requires directors to act with the care of a reasonably prudent person, which includes being adequately informed before making decisions.

Which scenario represents a violation of the anti-kickback provisions of the Stark Law and Anti-Kickback Statute in the healthcare compliance context?

Answer: A medical device company pays physicians per referral of Medicare patients

Paying physicians per referral of federal healthcare program patients constitutes an illegal kickback under the Anti-Kickback Statute and may trigger Stark Law liability.

A newly appointed compliance officer discovers the company has no formal third-party due diligence process. Which risk does this gap most directly expose the company to?

Answer: Liability for misconduct by agents and intermediaries under the FCPA

The FCPA holds companies liable for corrupt payments made through third-party agents and intermediaries, making due diligence on such parties a critical compliance safeguard.