CEA CEA Regulatory Compliance & Legal Ethics 1

Question 1

What is the primary distinction between legal compliance and ethical conduct in a US business context?

Accepted Answer

Ethical conduct sets a higher standard than the law and guides behavior in situations the law does not cover

Answer

Laws establish minimum standards, while ethics often demands more — acting with integrity even when the law permits less.

Question 2

Under the Sarbanes-Oxley Act (SOX), which requirement directly supports ethical financial reporting?

Accepted Answer

CEO and CFO personal certification of the accuracy of financial statements

Answer

SOX requires top executives to personally certify financial statements, creating direct accountability for honest reporting.

Question 3

What does the Foreign Corrupt Practices Act (FCPA) primarily prohibit for US companies?

Accepted Answer

Paying bribes to foreign government officials to obtain or retain business

Answer

The FCPA makes it illegal for US companies and their agents to bribe foreign government officials for business advantage.

Question 4

In ethics terms, what is 'regulatory capture'?

Accepted Answer

The process by which regulated industries gain undue influence over the agencies meant to oversee them

Answer

Regulatory capture undermines public interest when the regulator prioritizes industry interests over the mission to protect the public.

Question 5

Which US federal law requires financial institutions to maintain ethics-based programs to detect and prevent money laundering?

Accepted Answer

Bank Secrecy Act (BSA)

Answer

The Bank Secrecy Act mandates anti-money laundering programs, recordkeeping, and suspicious activity reporting to combat financial crimes.

(CEA) Certified Ethics Associate Practice Test