CMM CMM Professional Ethics & Standards 2 — Questions and Answers
Question 1: What is the purpose of the CMM continuing education requirement?
- To ensure certificants maintain current knowledge of evolving mineral management laws, practices, and industry standards (Correct answer)
- To require CMMs to take courses only offered by NARO-approved petroleum engineers
- To force credential holders to retake the initial certification examination annually
- To collect fees that fund NARO administrative operations
Correct answer: To ensure certificants maintain current knowledge of evolving mineral management laws, practices, and industry standards
Continuing education requirements keep CMMs current with changes in mineral law, lease practices, tax regulations, and industry standards so they can competently serve clients over time.
Question 2: Under professional ethics standards, what does 'competent representation' require of a CMM?
- Thorough preparation, adequate knowledge of relevant law and practice, and diligent execution on behalf of the client (Correct answer)
- Hiring a petroleum engineer to review all mineral valuations before client delivery
- Guaranteeing specific financial outcomes for the client's mineral portfolio
- Completing all tasks within 24 hours of client instruction
Correct answer: Thorough preparation, adequate knowledge of relevant law and practice, and diligent execution on behalf of the client
Competent representation requires the mineral manager to be thoroughly prepared, knowledgeable about applicable law and industry practice, and diligent in carrying out the client's instructions.
Question 3: A CMM receives an unsolicited gift from an operator after successfully negotiating a favorable lease for their client. What is the ethical course of action?
- Decline the gift or disclose its receipt to the client, as accepting it could compromise the CMM's independence (Correct answer)
- Accept the gift as a standard industry courtesy without disclosure
- Return the gift only if it exceeds $500 in value
- Report the gift to the state oil and gas commission
Correct answer: Decline the gift or disclose its receipt to the client, as accepting it could compromise the CMM's independence
Accepting gifts from opposing parties can compromise a professional's independence and objectivity; the ethical response is to decline or fully disclose the gift to the client.
Question 4: Which principle of professional ethics prohibits a CMM from making false or misleading statements about competitors?
- The prohibition on misrepresentation and unfair competition (Correct answer)
- The duty of confidentiality owed to former clients
- The fiduciary duty to current clients only
- The prohibition on fee-splitting with non-CMM professionals
Correct answer: The prohibition on misrepresentation and unfair competition
Professional ethics codes broadly prohibit misrepresentation and conduct that constitutes unfair competition, including making false statements about other professionals or their services.
Question 5: What does the principle of 'client confidentiality' require of a CMM after an engagement ends?
- The CMM must continue to protect confidential client information indefinitely after the engagement concludes (Correct answer)
- Confidentiality obligations expire when the client relationship terminates
- Former client information may be shared with new clients if relevant to their interests
- Confidentiality only applies to financial information, not to operational data
Correct answer: The CMM must continue to protect confidential client information indefinitely after the engagement concludes
Professional confidentiality obligations survive the end of the client engagement; a CMM must protect confidential information indefinitely unless the client consents to disclosure.
Question 6: When may a CMM permissibly share confidential client information without the client's consent?
- When required by law, court order, or to prevent reasonably certain harm to a third party (Correct answer)
- When a competitor requests the information for market research purposes
- When the CMM believes disclosure would benefit the client even without consent
- Whenever the information has been held for more than five years
Correct answer: When required by law, court order, or to prevent reasonably certain harm to a third party
Confidentiality may be overridden without client consent only in narrow circumstances such as legal compulsion by court order or statutory requirement, or to prevent substantial harm.
CMM CMM Professional Ethics & Standards 2
What is the purpose of the CMM continuing education requirement?