CGM CGM Ethics & Compliance Management 1 — Questions and Answers
Question 1: A general manager discovers that a sales team member has been falsifying expense reports. What is the MOST appropriate first step?
- Immediately terminate the employee
- Conduct a quiet internal investigation before taking action (Correct answer)
- Ignore it if the amounts are small
- Transfer the employee to another department
Correct answer: Conduct a quiet internal investigation before taking action
An internal investigation should be conducted first to gather facts before deciding on disciplinary action.
Question 2: Which document typically defines a company's standards for ethical behavior and guides employee decision-making?
- Employee handbook
- Code of conduct (Correct answer)
- Organizational chart
- Mission statement
Correct answer: Code of conduct
A code of conduct outlines the ethical standards and behavioral expectations for all employees.
Question 3: What is the primary purpose of a whistleblower policy in an organization?
- To encourage employees to spy on each other
- To protect employees who report unethical or illegal activity (Correct answer)
- To punish employees who complain about management
- To document employee performance issues
Correct answer: To protect employees who report unethical or illegal activity
Whistleblower policies protect employees from retaliation when they report misconduct or violations.
Question 4: A CGM candidate must understand that conflicts of interest in management are BEST addressed by:
- Keeping them secret from leadership
- Disclosing them and recusing oneself from related decisions (Correct answer)
- Allowing the manager to handle them independently
- Resolving them after the fact
Correct answer: Disclosing them and recusing oneself from related decisions
Disclosure and recusal from related decisions is the ethical standard for managing conflicts of interest.
Question 5: The Sarbanes-Oxley Act (SOX) primarily affects which type of organizations in the US?
- Privately held small businesses
- Publicly traded companies (Correct answer)
- Non-profit organizations only
- Government agencies only
Correct answer: Publicly traded companies
SOX applies to publicly traded companies and establishes requirements for financial reporting and internal controls.
Question 6: Which approach BEST demonstrates a manager's commitment to an ethical organizational culture?
- Setting strict rules but not following them personally
- Leading by example and modeling ethical behavior (Correct answer)
- Only enforcing ethics policies when auditors are present
- Delegating all ethics responsibilities to HR
Correct answer: Leading by example and modeling ethical behavior
Leaders who model ethical behavior create a culture where employees follow suit and hold themselves accountable.
CGM CGM Ethics & Compliance Management 1
A general manager discovers that a sales team member has been falsifying expense reports.
What is the MOST appropriate first step?