RCC Investigations, Reporting, and Ethics 2 — Questions and Answers
Question 1: During an internal investigation, an employee claims that a coworker retaliated against them for reporting a compliance concern. What should the compliance officer do first?
- Document the retaliation allegation separately and investigate it independently (Correct answer)
- Combine the retaliation claim with the original investigation
- Dismiss the claim until the original investigation concludes
- Immediately terminate the accused coworker pending review
Correct answer: Document the retaliation allegation separately and investigate it independently
Retaliation allegations must be treated as separate, independent matters to ensure impartiality and protect the reporting employee.
Question 2: Which standard of proof is typically applied in internal compliance investigations?
- Beyond a reasonable doubt
- Clear and convincing evidence
- Preponderance of the evidence (Correct answer)
- Probable cause
Correct answer: Preponderance of the evidence
Internal investigations use the civil 'preponderance of the evidence' standard—more likely than not—rather than the higher criminal standard.
Question 3: A compliance team discovers that its own CCO may be involved in the misconduct under investigation. What is the most appropriate next step?
- Have the CCO recuse themselves and escalate to the Audit Committee or Board (Correct answer)
- Allow the CCO to continue leading the investigation under supervision
- Terminate the investigation until a new CCO is hired
- Report directly to the SEC without internal escalation
Correct answer: Have the CCO recuse themselves and escalate to the Audit Committee or Board
When the CCO is implicated, independence requires escalation to the Audit Committee or Board to avoid a conflict of interest.
Question 4: Under the Sarbanes-Oxley Act Section 301, audit committees of public companies must establish procedures for what purpose?
- Approving executive compensation packages
- Receiving, retaining, and treating complaints regarding accounting and internal controls (Correct answer)
- Selecting external auditors without management input
- Certifying financial statements quarterly
Correct answer: Receiving, retaining, and treating complaints regarding accounting and internal controls
SOX Section 301 requires audit committees to have procedures for receiving and handling complaints about accounting, internal controls, and auditing matters.
Question 5: What is 'selective prosecution' in the context of compliance enforcement, and why is it an ethical concern?
- Choosing to investigate only high-level employees, creating unfair disparate impact (Correct answer)
- Reporting only material findings to regulators while withholding minor ones
- Settling cases with some parties while litigating others
- Prioritizing cases based on financial harm to the company
Correct answer: Choosing to investigate only high-level employees, creating unfair disparate impact
Selective prosecution targeting only senior or junior staff inconsistently violates fairness principles and can expose the organization to discrimination claims.
Question 6: A compliance officer learns of a potential FCPA violation involving a foreign subsidiary. Which agency has primary jurisdiction over FCPA enforcement?
- The Federal Trade Commission (FTC)
- The Department of Justice (DOJ) and the SEC (Correct answer)
- The Office of Foreign Assets Control (OFAC)
- The Financial Crimes Enforcement Network (FinCEN)
Correct answer: The Department of Justice (DOJ) and the SEC
FCPA enforcement is shared between the DOJ (criminal) and the SEC (civil) for issuers subject to U.S. securities laws.
Question 7: Which ethical principle requires a compliance professional to avoid using confidential investigation information for personal gain?
- Objectivity
- Confidentiality (Correct answer)
- Non-maleficence
- Loyalty
Correct answer: Confidentiality
The principle of confidentiality prohibits using privileged information obtained during investigations for personal benefit or unauthorized disclosure.
RCC Investigations, Reporting, and Ethics 2
During an internal investigation, an employee claims that a coworker retaliated against them for reporting a compliance concern.
What should the compliance officer do first?