CFA Legal Compliance & Ethical Standards 2

Question 1

Under the Foreign Corrupt Practices Act (FCPA), which of the following payments to a foreign government official is explicitly permitted?

Accepted Answer

Facilitating payments to expedite routine government actions

Answer

The FCPA contains a narrow exception for facilitating payments made to expedite or secure the performance of routine, non-discretionary government actions.

Question 2

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:

Accepted Answer

Disclose the finding to the client who engaged the examiner

Answer

CFEs owe their primary duty of disclosure to the client who retained them, and should report findings through the client's established reporting channels.

Question 3

The Sarbanes-Oxley Act Section 806 provides whistleblower protections primarily to employees of:

Accepted Answer

Publicly traded companies and their contractors

Answer

SOX Section 806 protects employees of publicly traded companies and their subsidiaries, contractors, and subcontractors who report securities fraud.

Question 4

Which legal doctrine allows prosecutors to hold a corporation criminally liable for the acts of its employees committed within the scope of employment?

Accepted Answer

Respondeat superior

Answer

Respondeat superior ('let the master answer') imposes vicarious criminal liability on a corporation for crimes committed by employees acting within their employment scope.

Question 5

An organization's code of conduct is MOST effective when it:

Accepted Answer

Is reinforced through regular training, tone from the top, and consistent enforcement

Answer

Codes of conduct are most effective when leadership models the behavior, employees receive ongoing training, and violations are consistently addressed.

CFA Practice Test

CFA Practice Test

CFA Legal Compliance & Ethical Standards 2