CFE Corporate Governance 3

Question 1

When a board member sits on the boards of two competing companies, this is known as a:

Accepted Answer

Interlocking directorate

Answer

An interlocking directorate occurs when a director serves on the boards of competing firms, raising antitrust and conflict-of-interest concerns.

Question 2

Under the FCPA, which of the following is NOT a permissible defense against bribery charges?

Accepted Answer

Competitors in the market routinely make similar payments

Answer

The fact that competitors also pay bribes is not a valid defense under the FCPA; only the local law and facilitating payment defenses are recognized.

Question 3

Which internal control framework is most widely used by U.S. public companies for SOX Section 404 compliance?

Accepted Answer

COSO Internal Control — Integrated Framework

Answer

The COSO Internal Control — Integrated Framework is the standard used by most U.S. public companies to assess and report on internal controls under SOX 404.

Question 4

A board that rubber-stamps all management proposals without independent scrutiny is exhibiting:

Accepted Answer

Board capture

Answer

Board capture describes a situation where management effectively controls the board, undermining independent oversight.

Question 5

Which of the following best describes the concept of 'tone at the top' in corporate governance?

Accepted Answer

The ethical climate established by senior leadership through their actions and decisions

Answer

Tone at the top refers to the ethical environment senior leaders create through their own behavior, which shapes organizational culture more than written policies alone.

Certified Fraud Examiner Exam Practice Test

Certified Fraud Examiner Exam Practice Test

CFE Corporate Governance 3