CIFC Quality Assurance and Control 3

Question 1

When assessing the quality of a mutual fund's internal controls, which framework is MOST commonly referenced in Canadian financial services?

Accepted Answer

COSO Internal Control Framework

Answer

Basel III Accord

Answer

ISO 9001 Quality Management

Answer

IFRS 15 Revenue Recognition

Question 2

A portfolio manager consistently executes personal trades in securities just before placing the same trades for client accounts. This practice is known as:

Accepted Answer

Front-running

Answer

Cherry-picking

Answer

Churning

Answer

Painting the tape

Question 3

Under CIFC principles, which element is MOST critical when designing a quality control checklist for fund operations?

Accepted Answer

Ensuring checks are mapped to specific regulatory requirements

Answer

Including as many items as possible to be thorough

Answer

Making the checklist digital rather than paper-based

Answer

Requiring sign-off from senior management on every item

Question 4

A mutual fund's management expense ratio (MER) has increased significantly compared to the prior year. Which quality assurance step should be taken FIRST?

Accepted Answer

Investigate and document the reasons for the increase

Answer

Immediately reduce the fund's operating costs

Answer

Disclose the change in the fund's next quarterly report

Answer

Seek approval from the fund's IRC for the higher expenses

Question 5

Which of the following is a key indicator that a mutual fund's quality assurance program is operating effectively?

Accepted Answer

Timely identification and resolution of compliance exceptions

Answer

Zero client complaints received in the past year

Answer

Consistent fund performance above benchmark

Answer

High employee satisfaction scores in annual reviews

Question 6

Under NI 81-102, what is the maximum percentage of a mutual fund's net assets that can be invested in securities of a single issuer (general rule)?

Accepted Answer

10%

Answer

5%

Answer

15%

Answer

20%

Question 7

A quality assurance review finds that trade confirmations are consistently sent to clients two days after the settlement date. This represents a failure in:

Accepted Answer

Operational process timeliness controls

Answer

Portfolio construction quality

Answer

Investment policy compliance

Answer

Independent review committee oversight