CSCP Compliance Programs & Risk Management 2

Question 1

Under SEC Rule 38a-1, what is the primary role of a mutual fund's Chief Compliance Officer (CCO)?

Accepted Answer

Administer the fund's compliance policies and procedures

Answer

SEC Rule 38a-1 requires registered investment companies to designate a CCO who administers the fund's policies and procedures designed to prevent violations of federal securities laws.

Question 2

Which risk management framework, developed by COSO, is most widely referenced in securities compliance programs for enterprise-wide risk assessment?

Accepted Answer

COSO ERM Framework

Answer

The COSO Enterprise Risk Management (ERM) Framework is the most widely adopted framework for integrating risk management with governance and strategy in financial services compliance programs.

Question 3

A broker-dealer's written supervisory procedures (WSPs) must be reviewed at minimum how frequently under FINRA rules?

Accepted Answer

Annually

Answer

FINRA rules require broker-dealers to conduct an annual review of their written supervisory procedures to ensure they remain current and effective.

Question 4

What is 'residual risk' in the context of a securities compliance risk assessment?

Accepted Answer

Risk remaining after controls and mitigating measures are applied

Answer

Residual risk is the level of risk that remains after an organization has implemented its risk controls and mitigation strategies, as opposed to inherent risk which exists before controls.

Question 5

Which element is NOT typically required in a broker-dealer's annual compliance report to senior management?

Accepted Answer

A detailed audit of each registered representative's trades

Answer

Annual compliance reports to senior management address program adequacy, material issues, and recommendations — not individual trade-by-trade audits of all registered representatives.

(CSCP) Certified Securities Compliance Professional Practice Test

(CSCP) Certified Securities Compliance Professional Practice Test

CSCP Compliance Programs & Risk Management 2