CGM CGM Ethics & Compliance Management 2 — Questions and Answers
Question 1: In the context of the CGM exam, 'due diligence' in compliance refers to:
- Hiring legal counsel for all decisions
- Taking reasonable steps to identify and address compliance risks (Correct answer)
- Passing all compliance responsibilities to a third party
- Conducting audits only when regulators request them
Correct answer: Taking reasonable steps to identify and address compliance risks
Due diligence means proactively identifying and mitigating compliance risks through systematic review.
Question 2: An employee reports a potential OSHA violation. As a general manager, your FIRST action should be to:
- Dismiss the concern unless injuries have occurred
- Investigate the situation and address the hazard immediately (Correct answer)
- Wait for the annual safety audit
- Inform customers about the potential issue
Correct answer: Investigate the situation and address the hazard immediately
Workplace safety complaints must be investigated and hazards corrected promptly to protect employees and ensure compliance.
Question 3: Which of the following is an example of a regulatory compliance requirement for US businesses?
- Achieving a Net Promoter Score above 70
- Maintaining EEOC-compliant hiring practices (Correct answer)
- Reaching a specific profit margin
- Posting quarterly earnings on social media
Correct answer: Maintaining EEOC-compliant hiring practices
The Equal Employment Opportunity Commission (EEOC) requires non-discriminatory hiring practices, which is a legal compliance mandate.
Question 4: A general manager who accepts gifts from vendors in exchange for awarding contracts is engaging in:
- Strategic partnership development
- Bribery and a conflict of interest (Correct answer)
- Standard procurement practice
- Vendor relationship management
Correct answer: Bribery and a conflict of interest
Accepting gifts in exchange for business decisions constitutes bribery and a direct conflict of interest.
Question 5: Which internal control mechanism BEST helps prevent financial fraud in an organization?
- Allowing one person to control all financial processes
- Implementing segregation of duties (Correct answer)
- Eliminating external audits to reduce costs
- Giving managers unlimited financial authority
Correct answer: Implementing segregation of duties
Segregation of duties ensures no single employee controls all aspects of a financial transaction, reducing fraud risk.
Question 6: The Foreign Corrupt Practices Act (FCPA) prohibits US companies from:
- Importing goods from foreign markets
- Bribing foreign government officials to obtain business (Correct answer)
- Competing in international tenders
- Hiring foreign nationals in executive roles
Correct answer: Bribing foreign government officials to obtain business
The FCPA makes it illegal for US companies to bribe foreign officials to gain or retain business advantages.
CGM CGM Ethics & Compliance Management 2
In the context of the CGM exam, 'due diligence' in compliance refers to: