CEA CEA Regulatory Compliance & Legal Ethics 2

Question 1

What ethical obligation does a compliance officer have when they discover that senior management is concealing a regulatory violation?

Accepted Answer

Escalate the matter through available channels, including the board or external regulators if necessary

Answer

A compliance officer's duty is to the law and the organization's integrity, not to protect individuals — escalation, even to external authorities, may be required.

Question 2

What is the ethical significance of 'materiality' in financial and compliance disclosures?

Accepted Answer

It defines the threshold at which information is significant enough that a reasonable investor or regulator would consider it important

Answer

Materiality is a core concept in disclosure ethics — omitting material information can mislead stakeholders even if the omission is technically legal.

Question 3

Under the US Federal Sentencing Guidelines, what is the benefit of having an effective compliance and ethics program when an organization faces sentencing?

Accepted Answer

The organization may receive a reduced culpability score, leading to lower fines and penalties

Answer

An effective compliance and ethics program can reduce an organization's culpability score under the Guidelines, directly lowering the range of fines.

Question 4

Which of the following best describes an attorney's ethical duty of candor to a tribunal under US professional conduct rules?

Accepted Answer

Attorneys must not make false statements of fact or law to courts and must correct prior falsehoods

Answer

Rule 3.3 of the ABA Model Rules prohibits attorneys from making knowingly false statements to courts and requires correction of prior misrepresentations.

Question 5

What is the purpose of an 'ethics and compliance risk assessment' in a regulatory context?

Accepted Answer

To systematically identify, prioritize, and mitigate the legal and ethical risks most likely to affect the organization

Answer

Risk assessments direct limited compliance resources to the highest-probability and highest-impact ethics and legal exposure areas.

(CEA) Certified Ethics Associate Practice Test

(CEA) Certified Ethics Associate Practice Test

CEA CEA Regulatory Compliance & Legal Ethics 2