CPC CPC Ethics & Professional Standards 1

Question 1

Which professional organization publishes the Code of Professional Conduct that governs enrolled actuaries working on pension plans?

Accepted Answer

The American Academy of Actuaries (AAA)

Answer

The American Academy of Actuaries publishes the Code of Professional Conduct, which applies to all actuaries including enrolled actuaries advising on pension plans.

Question 2

An enrolled actuary signs a Schedule SB for a plan with a known material actuarial error. What is the correct professional response?

Accepted Answer

Refuse to sign and advise the plan administrator of the error

Answer

Enrolled actuaries have a professional duty not to certify a return containing a known material error; they must refuse to sign and advise the client to correct the filing.

Question 3

A CPC who discovers that a plan sponsor has engaged in a prohibited transaction should do what?

Accepted Answer

Advise the plan sponsor of the violation and recommend corrective action, including VCP or VFCP filing

Answer

A CPC should inform the plan sponsor of the prohibited transaction, advise on the consequences, and recommend available correction programs such as the DOL's Voluntary Fiduciary Correction Program (VFCP).

Question 4

Under ASPPA's Code of Professional Conduct, what obligation does a CPC have when providing written advice?

Accepted Answer

Written advice must be balanced, state material assumptions, and identify significant limitations

Answer

ASPPA's Code requires that written professional advice be complete, accurate, and clearly state material assumptions, methods, and significant limitations or uncertainties.

Question 5

A pension consultant receives a referral fee from an investment firm for recommending the firm's collective investment trusts. Under DOL guidance, what must the consultant do?

Accepted Answer

Disclose the fee arrangement to plan fiduciaries and ensure the arrangement is reasonable

Answer

ERISA Section 408(b)(2) requires that service providers receiving indirect compensation disclose such arrangements to plan fiduciaries to allow informed decision-making.

(CPC) Certified Pension Consultant Practice Test

(CPC) Certified Pension Consultant Practice Test

CPC CPC Ethics & Professional Standards 1