Conflict of Interest Management Flashcards
7 cards from real CEA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Conflict of Interest Management flashcards as text
A private equity firm's auditor also provides consulting services to the same firm. This arrangement PRIMARILY raises concerns about:
Answer: Auditor independence being compromised by financial ties to the client
Providing both audit and consulting services to the same client creates financial incentives that can undermine the auditor's independence and objectivity.
Which of the following BEST describes the difference between 'recusal' and 'waiver' in conflict of interest management?
Answer: Recusal removes the conflicted party from a decision; waiver allows participation after disclosure and approval
Recusal means stepping away entirely, while a waiver is a formal grant of permission to participate despite the disclosed conflict.
A board of directors reviews a related-party transaction involving the CEO. Best governance practice requires:
Answer: The CEO to be excluded from the vote and preferably the deliberation
Related-party transactions require the interested party to be excluded from deliberation and voting to ensure an independent review.
An employee reports a conflict of interest in good faith and is subsequently passed over for a promotion. Under ethical and legal standards, this MOST likely constitutes:
Answer: Retaliation against a whistleblower, which is prohibited
Adverse employment action taken in response to a good-faith ethics disclosure constitutes prohibited retaliation.
Which standard is MOST commonly used to determine whether a conflict of interest should be disclosed?
Answer: Whether a reasonable person would consider the interest likely to influence the individual's judgment
The 'reasonable person' standard is the widely applied test — if an objective observer would see a potential influence, disclosure is warranted.
A government procurement officer accepts a gift from a vendor during the bidding process but argues it did not change his decision. Under conflict of interest ethics, this argument is:
Answer: Irrelevant — accepting the gift itself creates an impermissible conflict regardless of actual influence
The act of accepting a gift from a bidder creates a conflict of interest in itself; the actual effect on the decision is not the controlling factor.
Which of the following MOST effectively demonstrates an organization's commitment to conflict of interest management over time?
Answer: Consistently enforcing disclosures, conducting annual training, and auditing compliance
Sustained commitment is demonstrated through ongoing enforcement, education, and audits — not one-time documentation.