Legal Compliance & Ethical Standards Flashcards
7 cards from real CFA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Legal Compliance & Ethical Standards flashcards as text
Under the Foreign Corrupt Practices Act (FCPA), which of the following payments to a foreign government official is explicitly permitted?
Answer: Facilitating payments to expedite routine government actions
The FCPA contains a narrow exception for facilitating payments made to expedite or secure the performance of routine, non-discretionary government actions.
A fraud examiner discovers that a client's employee has been accepting kickbacks. Under the CFE Code of Professional Ethics, the examiner's FIRST obligation is to:
Answer: Disclose the finding to the client who engaged the examiner
CFEs owe their primary duty of disclosure to the client who retained them, and should report findings through the client's established reporting channels.
The Sarbanes-Oxley Act Section 806 provides whistleblower protections primarily to employees of:
Answer: Publicly traded companies and their contractors
SOX Section 806 protects employees of publicly traded companies and their subsidiaries, contractors, and subcontractors who report securities fraud.
Which legal doctrine allows prosecutors to hold a corporation criminally liable for the acts of its employees committed within the scope of employment?
Answer: Respondeat superior
Respondeat superior ('let the master answer') imposes vicarious criminal liability on a corporation for crimes committed by employees acting within their employment scope.
An organization's code of conduct is MOST effective when it:
Answer: Is reinforced through regular training, tone from the top, and consistent enforcement
Codes of conduct are most effective when leadership models the behavior, employees receive ongoing training, and violations are consistently addressed.
Under the Dodd-Frank Act, the SEC's whistleblower program requires that a tipster's information must:
Answer: Lead to a successful enforcement action exceeding $1 million in sanctions
Dodd-Frank whistleblower awards are only available when the SEC's enforcement action results in sanctions exceeding $1 million.
A CFE who suspects that continuing an engagement will require violating the law should:
Answer: Withdraw from the engagement and consult legal counsel
CFEs must refuse to engage in illegal acts and should withdraw from engagements that would require them to violate the law or their professional standards.