Certified Management Accountant Professional Ethics 5 — Questions and Answers
Question 1: Under IMA ethical standards, 'objectivity' is MOST closely associated with which principle?
- Competence
- Confidentiality
- Integrity
- Credibility (Correct answer)
Correct answer: Credibility
The Credibility principle requires members to communicate information fairly and objectively, making objectivity its central component.
Question 2: A CMA in a management role creates a bonus structure that rewards employees for meeting earnings targets, knowing it incentivizes earnings manipulation. This MOST violates:
- Credibility — structuring incentives that encourage misleading reporting (Correct answer)
- Competence — failing to design proper compensation plans
- Confidentiality — sharing bonus information internally
- None — incentive design is a management prerogative
Correct answer: Credibility — structuring incentives that encourage misleading reporting
Designing systems that systematically encourage misleading financial reporting violates the Credibility standard's requirement for fair and objective information.
Question 3: Which of the following is NOT one of the four principles in the IMA Statement of Ethical Professional Practice?
- Competence
- Integrity
- Independence (Correct answer)
- Credibility
Correct answer: Independence
The four IMA principles are Competence, Confidentiality, Integrity, and Credibility; Independence is an AICPA/auditing concept, not an IMA principle.
Question 4: A CMA preparing a capital investment analysis intentionally omits negative NPV scenarios to make a pet project look better. This violates PRIMARILY:
- Competence, because NPV analysis requires technical skill
- Credibility, because all relevant information must be disclosed (Correct answer)
- Confidentiality, because project data is proprietary
- Integrity, because the CMA has a personal stake in the project
Correct answer: Credibility, because all relevant information must be disclosed
Credibility requires disclosing all relevant information, including negative scenarios, so that decision-makers have a complete picture.
Question 5: An IMA member who violates the Statement of Ethical Professional Practice may face:
- Criminal prosecution by the IMA
- Revocation of CMA certification and termination of IMA membership (Correct answer)
- A financial fine paid directly to the IMA
- A mandatory public apology posted on the IMA website
Correct answer: Revocation of CMA certification and termination of IMA membership
The IMA can revoke CMA certification and terminate membership as its primary disciplinary actions against members who violate ethical standards.
Question 6: A CMA is offered a low-cost loan by a bank that also manages her company's debt. Under IMA standards, she should:
- Accept the loan if the interest rate is market rate
- Disclose the offer to management and decline or recuse from bank-related decisions (Correct answer)
- Accept since it is a personal financial matter unrelated to work
- Report the bank to regulators for offering preferential terms
Correct answer: Disclose the offer to management and decline or recuse from bank-related decisions
Even a market-rate loan from a business partner creates an appearance of conflict of interest and must be disclosed; recusal from related company decisions is required.
Question 7: Which of the following BEST illustrates the Competence principle of the IMA Statement of Ethical Professional Practice?
- Refusing to share a confidential report with unauthorized personnel
- Completing 30 hours of CPE in areas relevant to current job responsibilities (Correct answer)
- Disclosing a conflict of interest to a supervisor
- Providing complete and unbiased analysis in a management report
Correct answer: Completing 30 hours of CPE in areas relevant to current job responsibilities
Competence requires maintaining professional knowledge and skills through ongoing education, such as completing CPE relevant to current responsibilities.
Certified Management Accountant Professional Ethics 5
Under IMA ethical standards, 'objectivity' is MOST closely associated with which principle?