CCT Ethics & Corporate Governance 5 — Questions and Answers
Question 1: A company's compliance program includes policies, but a risk assessment has never been conducted. Which fundamental program element is missing?
- Risk assessment (Correct answer)
- Written policies and procedures
- Training and communication
- Monitoring and auditing
Correct 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.
Question 2: Which principle from the OECD Guidelines for Multinational Enterprises relates most directly to corporate governance transparency?
- Disclosure of material information to shareholders and the public in a timely manner (Correct answer)
- Prohibition of all political contributions worldwide
- Mandatory local sourcing of materials
- Elimination of all intra-group transactions
Correct 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.
Question 3: Under the concept of 'corporate culture' in compliance, what does a 'speak-up culture' primarily aim to achieve?
- Encouraging employees to raise concerns without fear of retaliation (Correct answer)
- Mandating public disclosure of all internal grievances
- Requiring employees to report competitors' misconduct
- Empowering management to override employee objections
Correct 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.
Question 4: 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:
- Prohibited because the intent is to influence an official act (Correct answer)
- Permitted as a reasonable business entertainment expense
- Permitted if it falls under the facilitating payments exception
- Prohibited only if the value exceeds $250
Correct 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.
Question 5: Which fiduciary duty requires directors to act on an informed basis after adequate deliberation before making a business decision?
- Duty of care (Correct answer)
- Duty of loyalty
- Duty of candor
- Duty of obedience
Correct 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.
Question 6: Which scenario represents a violation of the anti-kickback provisions of the Stark Law and Anti-Kickback Statute in the healthcare compliance context?
- A medical device company pays physicians per referral of Medicare patients (Correct answer)
- A hospital offers free parking to employees who work night shifts
- A physician group negotiates volume discounts with a supplier
- A compliance officer receives a salary from the company she oversees
Correct 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.
Question 7: 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?
- Liability for misconduct by agents and intermediaries under the FCPA (Correct answer)
- Violations of the Americans with Disabilities Act
- Breach of domestic employment discrimination laws
- Non-compliance with product safety regulations
Correct 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.
CCT Ethics & Corporate Governance 5
A company's compliance program includes policies, but a risk assessment has never been conducted.
Which fundamental program element is missing?