CIFC Quality Assurance and Control 4

Question 1

In mutual fund quality assurance, 'segregation of duties' PRIMARILY means:

Accepted Answer

Ensuring no single employee controls all steps of a critical process

Answer

Separating retail and institutional client accounts

Answer

Keeping the fund's assets in separate custodial accounts

Answer

Dividing compliance responsibilities between two regulators

Question 2

A fund company's KYC (Know Your Client) update process has not been performed for 40% of client accounts in over three years. This is PRIMARILY a failure of:

Accepted Answer

Ongoing suitability and compliance controls

Answer

Investment performance monitoring

Answer

Fee disclosure requirements

Answer

Portfolio rebalancing procedures

Question 3

Which of the following BEST describes a 'material compliance issue' under CIFC standards?

Accepted Answer

A violation likely to have a significant impact on clients or the firm's regulatory standing

Answer

Any client complaint received in writing

Answer

Any trade executed at a price differing from the intended price

Answer

A missed internal reporting deadline of more than one business day

Question 4

Under MFDA rules, registered mutual fund dealers are required to maintain client account records for a minimum of:

Accepted Answer

7 years

Answer

3 years

Answer

5 years

Answer

10 years

Question 5

A fund manager uses a quantitative model to screen securities. The model has a coding error that has been present for six months. This BEST illustrates a failure in:

Accepted Answer

Model validation and ongoing testing controls

Answer

Benchmark selection quality

Answer

Portfolio manager licensing requirements

Answer

Client disclosure procedures

Question 6

Which scenario BEST demonstrates an effective 'four-eyes principle' in fund operations?

Accepted Answer

Two authorized individuals must independently approve large wire transfers

Answer

A manager reviews their own trade orders for accuracy before submission

Answer

The compliance department audits trading records once per quarter

Answer

Senior management signs off on all annual performance reports

Question 7

Under Canadian regulations, when a mutual fund's investment strategy materially changes, unitholders must generally be provided with:

Accepted Answer

60 days' written notice before the change takes effect

Answer

A verbal explanation at the next annual meeting

Answer

An updated Fund Facts at least 90 days in advance

Answer

Immediate notification by email on the day of the change