CPFM Ethics and Corporate Governance in Finance 1

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

Fiduciary duty obligates financial officers and directors to act in the best interest of the shareholders and the organization, placing those interests above their own.

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

SOX was enacted following high-profile corporate accounting frauds at companies like Enron and WorldCom to improve financial disclosure and prevent accounting fraud.

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

SOX Section 302 requires the principal executive and financial officers to personally certify that financial reports fairly present the company's financial condition.

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

The audit committee is responsible for overseeing the financial reporting process, internal controls, and the relationship with external auditors to ensure the integrity of financial statements.

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

An independent director is one who has no material financial or personal relationship with the company that could impair their ability to exercise independent judgment.

CPFM Practice Test

CPFM Practice Test

CPFM Ethics and Corporate Governance in Finance 1