CMCA Ethics and Professional Conduct 3 — Questions and Answers
Question 1: A manager learns that a board treasurer has been using association funds for personal expenses. What is the CMCA's ethical obligation?
- Confront the treasurer privately and give them time to repay
- Document the suspected fraud, report it to the full board and legal counsel, and preserve records (Correct answer)
- Wait until the annual audit confirms the irregularity
- Notify only the management company's regional supervisor
Correct answer: Document the suspected fraud, report it to the full board and legal counsel, and preserve records
Suspected fraud must be documented, reported to the board (excluding the implicated member) and legal counsel promptly, and records must be preserved to protect the association.
Question 2: Which of the following best reflects the CMCA's duty of loyalty?
- Prioritizing the management company's financial interests over the association's
- Acting in the best interests of the association, not personal or employer gain (Correct answer)
- Aligning decisions with the most influential board member's preferences
- Favoring long-term residents over new owners in dispute resolution
Correct answer: Acting in the best interests of the association, not personal or employer gain
The duty of loyalty requires the CMCA to act solely in the best interests of the association and its members, free from personal or third-party conflicts.
Question 3: A prospective management company asks a departing CMCA to bring the prior association's vendor list and contact database to give the new firm a competitive advantage. What should the manager do?
- Share the data since it will benefit the manager's new employer
- Refuse, as the vendor and contact data belongs to the association and is confidential (Correct answer)
- Share only publicly available contact information
- Ask the board president for informal permission
Correct answer: Refuse, as the vendor and contact data belongs to the association and is confidential
Association records and databases are the property of the association; taking or sharing them for competitive advantage violates confidentiality obligations that persist after employment ends.
Question 4: What does 'due diligence' mean in the context of a CMCA's professional obligations?
- Completing tasks as quickly as possible to reduce costs
- Exercising the care, skill, and thoroughness a reasonable professional would apply to the same situation (Correct answer)
- Delegating all complex tasks to legal counsel
- Following board instructions without independent verification
Correct answer: Exercising the care, skill, and thoroughness a reasonable professional would apply to the same situation
Due diligence requires the manager to apply reasonable care and professional skill when acting on behalf of the association, consistent with the standard of a competent professional.
Question 5: A CMCA manager has a personal friendship with a contractor who submits the highest bid. How should the manager handle the bid review?
- Award the contract since friendship ensures reliability
- Disclose the personal relationship to the board and recuse from the selection decision (Correct answer)
- Rank the friend's bid lower to avoid the appearance of favoritism
- Ask the friend to resubmit a lower bid privately
Correct answer: Disclose the personal relationship to the board and recuse from the selection decision
Personal relationships with bidders create conflicts of interest that must be disclosed to the board; the manager should then recuse from the final selection to ensure impartiality.
Question 6: Under ethical standards, how should a CMCA respond if a homeowner offers to pay the manager directly for expedited processing of an architectural review application?
- Accept the payment since it compensates for extra work
- Decline the payment and process the application through normal procedures (Correct answer)
- Accept if the board approves the arrangement
- Decline but process the application faster as a courtesy
Correct answer: Decline the payment and process the application through normal procedures
Accepting personal payments from homeowners for official duties creates a conflict of interest and undermines fair treatment of all owners; the application must follow standard procedures.
Question 7: A CMCA manager is aware that the association's insurance policy has lapsed but the board has not disclosed this to homeowners. What is the ethical course of action?
- Remain silent since insurance is a board responsibility
- Advise the board of the disclosure obligation and recommend immediate corrective action (Correct answer)
- Notify homeowners directly without board authorization
- Wait until the next scheduled board meeting to raise the issue
Correct answer: Advise the board of the disclosure obligation and recommend immediate corrective action
The manager has an ethical duty to advise the board of material issues affecting the community and the potential legal obligation to disclose material facts to owners.
CMCA Ethics and Professional Conduct 3
A manager learns that a board treasurer has been using association funds for personal expenses.
What is the CMCA's ethical obligation?