CCT Ethics & Corporate Governance 4

Question 1

A board's nominating committee fails to assess diversity when recruiting new directors. Which governance best practice is being neglected?

Accepted Answer

Board composition and diversity oversight

Answer

Nominating committees are expected under corporate governance best practices and SEC disclosure rules to consider diversity of skills, backgrounds, and perspectives when evaluating director candidates.

Question 2

Which scenario best illustrates a 'tone at the top' failure in corporate governance?

Accepted Answer

Senior executives routinely override expense approval controls

Answer

Tone at the top refers to leadership's demonstrated commitment to ethical conduct; executives who override controls signal that rules do not apply to them, undermining the entire compliance culture.

Question 3

Under the Telephone Consumer Protection Act (TCPA), which practice requires prior express written consent?

Accepted Answer

Sending marketing text messages using an autodialer

Answer

The TCPA requires prior express written consent before sending marketing texts or calls using an automatic telephone dialing system to cell phones.

Question 4

An ethics hotline report alleges that a compliance manager is retaliating against a whistleblower. Who should ideally investigate this complaint?

Accepted Answer

An independent third party or internal audit reporting to the audit committee

Answer

When the accused is within the compliance function, the investigation must bypass that function and be conducted by an independent party reporting to the audit committee to preserve objectivity.

Question 5

Which of the following is an example of insider trading based on the 'misappropriation theory'?

Accepted Answer

A financial journalist trades on material nonpublic information learned during news gathering

Answer

The misappropriation theory extends insider trading liability to outsiders who trade on material nonpublic information in breach of a duty owed to the information source, such as an employer.

(CCT) Certified Compliance Technician Practice Test

(CCT) Certified Compliance Technician Practice Test

CCT Ethics & Corporate Governance 4