CSC Ethics & Professional Conduct 2 — Questions and Answers
Question 1: A senior consultant discovers that a client's CFO has been inflating revenue figures before an IPO. What is the consultant's primary ethical obligation?
- Immediately report findings to the SEC without notifying the client
- Inform the engagement partner and follow the firm's whistleblower protocols (Correct answer)
- Keep the information confidential as it was learned during client engagement
- Advise the CFO privately to correct the figures before disclosure
Correct answer: Inform the engagement partner and follow the firm's whistleblower protocols
The consultant must escalate to the engagement partner and follow established firm protocols, which typically include legal review before any external reporting.
Question 2: Which principle best describes the obligation of a senior consultant to avoid personal financial gain from non-public information obtained during an engagement?
- Independence (Correct answer)
- Confidentiality
- Non-disclosure
- Integrity
Correct answer: Independence
Independence requires consultants to avoid relationships or financial interests that could compromise—or appear to compromise—objectivity, including trading on insider information.
Question 3: A client pressures a senior consultant to change the conclusion of a risk assessment to avoid board-level scrutiny. The consultant should:
- Revise the conclusion with a qualifying footnote to satisfy the client
- Refuse to alter findings and document the client's request in writing (Correct answer)
- Transfer the engagement to a junior consultant to avoid the conflict
- Accept the revision since the client has ultimate authority over reports
Correct answer: Refuse to alter findings and document the client's request in writing
Objectivity requires that conclusions reflect evidence; the consultant must refuse and document the pressure to protect both professional integrity and legal standing.
Question 4: Under the IMA Statement of Ethical Professional Practice, which of the following best illustrates a breach of the Credibility standard?
- Failing to disclose a conflict of interest to a client
- Presenting financial data selectively to support a predetermined conclusion (Correct answer)
- Accepting a gift from a vendor above the firm's threshold
- Billing a client for hours not worked on the engagement
Correct answer: Presenting financial data selectively to support a predetermined conclusion
Credibility requires communicating information fairly and objectively; selective presentation that misleads stakeholders directly violates this standard.
Question 5: A senior consultant is asked to perform due diligence on a company in which her spouse holds a significant equity stake. The most appropriate action is to:
- Proceed but disclose the relationship in the final report
- Recuse herself and notify the engagement manager of the conflict (Correct answer)
- Complete the engagement using only publicly available data to remain objective
- Have a colleague review her work product before submission
Correct answer: Recuse herself and notify the engagement manager of the conflict
A direct financial interest through a family member creates an actual conflict of interest that requires recusal, not merely disclosure.
Question 6: What does the professional standard of 'due care' specifically require of a senior consultant?
- Guaranteeing error-free deliverables on every engagement
- Completing work with the competence and diligence of a qualified professional (Correct answer)
- Obtaining client sign-off before finalizing any recommendation
- Avoiding all tasks outside the consultant's primary area of expertise
Correct answer: Completing work with the competence and diligence of a qualified professional
Due care requires applying the level of skill, diligence, and judgment reasonably expected of a competent senior professional—not perfection.
Question 7: A senior consultant learns that a colleague has fabricated interview data in a client deliverable. If the colleague refuses to correct the record, the consultant should:
- Anonymously alert the client to the error without firm involvement
- Report the misconduct through the firm's ethics or compliance channel (Correct answer)
- Remove his name from the deliverable and continue with his own work
- Confront the colleague again and allow one additional chance to self-report
Correct answer: Report the misconduct through the firm's ethics or compliance channel
Fabricated data constitutes fraud; the consultant has an obligation to report through official ethics channels rather than handle it unilaterally or ignore it.
CSC Ethics & Professional Conduct 2
A senior consultant discovers that a client's CFO has been inflating revenue figures before an IPO.
What is the consultant's primary ethical obligation?