CME Professional Ethics & Governance 2

Question 1

A board director owns stock in a company that is bidding on a contract with the organization. What is the MOST appropriate immediate action?

Accepted Answer

Disclose the conflict and recuse herself from the vote

Answer

Disclosing the conflict and recusing oneself from the decision is the standard governance response to a director conflict of interest.

Question 2

Which governance principle holds that management is accountable to shareholders and other stakeholders for organizational outcomes?

Accepted Answer

Accountability

Answer

Accountability is the governance principle requiring that those entrusted with authority answer for their decisions and outcomes to principals.

Question 3

An executive discovers that a prior quarterly report contained a material error that benefited the company's stock price. The BEST ethical course of action is to:

Accepted Answer

Immediately disclose the error to regulators and the board

Answer

Material misstatements in public filings require prompt disclosure to regulators and the board under securities law and ethical obligations.

Question 4

The 'tone at the top' concept in organizational ethics primarily refers to:

Accepted Answer

Senior leadership's visible behavior setting the cultural standard for integrity

Answer

Tone at the top describes how senior leaders' own conduct and stated values shape the organization's ethical culture more than written policies.

Question 5

A company's audit committee is BEST described as serving which primary function?

Accepted Answer

Overseeing financial reporting integrity and internal controls

Answer

The audit committee provides board-level oversight of financial reporting, external auditors, and internal control systems.

(CME) Certified Management Executive Practice Test

(CME) Certified Management Executive Practice Test

CME Professional Ethics & Governance 2