Corporate Governance and Ethics Flashcards
7 cards from real ACFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Corporate Governance and Ethics flashcards as text
Which of the following BEST illustrates a conflict of interest in a corporate governance context?
Answer: A procurement officer who awards a contract to their spouse's company
Awarding a contract to a spouse's company puts personal financial interests directly in conflict with the obligation to act in the organization's best interest.
The 'reasonable person' standard in ethics compliance programs refers to:
Answer: Behavior that a typical, prudent person would consider acceptable under the circumstances
The reasonable person standard asks whether an objective, prudent individual in the same situation would consider the conduct appropriate.
Which characteristic of an effective ethics hotline is MOST critical to encouraging employee use?
Answer: Guaranteed anonymity and non-retaliation protections
Employees will only use a hotline if they trust their identity will be protected and they won't face retaliation for raising concerns.
Under COSO's Enterprise Risk Management framework, which of the following is an example of a 'risk appetite' statement?
Answer: The company will never exceed a 2% loss ratio on its investment portfolio
A risk appetite statement defines the amount of risk an organization is willing to accept in pursuit of its objectives, expressed as a quantitative threshold.
A company's board has three members: the CEO, the CEO's spouse, and a retired executive who receives consulting income from the firm. Which statement is MOST accurate?
Answer: None of the board members qualify as independent directors
The CEO lacks independence by definition, the CEO's spouse has a family relationship, and the consulting income gives the retired executive a material relationship — none are independent.
Which of the following is a key principle of the UK Bribery Act that differs from the US Foreign Corrupt Practices Act?
Answer: The UK Act prohibits all facilitation payments with no exception
Unlike the FCPA which permits facilitation payments, the UK Bribery Act 2010 prohibits all bribes including small facilitation payments.
When evaluating whether a board is exercising proper oversight of management, fraud examiners should FIRST assess:
Answer: The board's composition, independence, and access to information
Effective oversight depends on whether directors are truly independent, have appropriate expertise, and receive timely and complete information from management.