CPFM Ethics and Corporate Governance in Finance

Question 1

A fiduciary duty in financial management requires that an officer or director act in the best interest of whom?

Accepted Answer

The shareholders and the organization they serve

Answer

Themselves and close associates

Answer

Creditors and lenders exclusively

Answer

Government regulators only

Question 2

The Sarbanes-Oxley Act (SOX) of 2002 was primarily enacted in response to which of the following?

Accepted Answer

Corporate accounting scandals such as Enron and WorldCom

Answer

The 2008 global financial crisis

Answer

Excessive executive compensation in the tech sector

Answer

Foreign bribery by U.S. multinational corporations

Question 3

Which section of the Sarbanes-Oxley Act requires CEOs and CFOs to personally certify the accuracy of their company's financial statements?

Accepted Answer

Section 302

Answer

Section 101

Answer

Section 201

Answer

Section 404

Question 4

What is the primary function of an audit committee within a corporation's board of directors?

Accepted Answer

Overseeing the integrity of financial reporting and the external audit process

Answer

Setting executive compensation packages

Answer

Approving major capital expenditure projects

Answer

Managing day-to-day treasury operations

Question 5

An independent director on a corporate board is best defined as one who:

Accepted Answer

Has no material relationship with the company that could compromise objectivity

Answer

Has worked at the company for more than 10 years

Answer

Is appointed directly by the government regulatory body

Answer

Holds the largest number of shares in the company

Question 6

The phrase 'tone at the top' in corporate governance refers to:

Accepted Answer

The ethical climate and culture established by senior leadership

Answer

The loudest voice in board meetings having the most influence

Answer

The highest tier of compensation awarded to executives

Answer

A formal whistleblower policy issued by management

Question 7

A financial manager who approves a contract with a vendor in which they have an undisclosed personal financial stake is committing which ethical violation?

Accepted Answer

Conflict of interest

Answer

Insider trading

Answer

Earnings management

Answer

Fraudulent misrepresentation