CFC Corporate Governance & Ethics Flashcards
6 cards from real CFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CFC Corporate Governance & Ethics flashcards as text
What is 'tone at the top' in the context of corporate ethics and governance?
Answer: The ethical culture and standards set by senior leadership that influence behavior throughout the organization
Tone at the top refers to the ethical environment established by senior executives and the board, whose behavior and communications set the standard for organizational culture and employee conduct.
A financial controller discovers that a colleague is inflating sales figures to meet bonus targets. Under IMA's Statement of Ethical Professional Practice, what is the controller's primary obligation?
Answer: Report the issue through appropriate internal channels and escalate if unresolved
IMA's ethical standards require members to communicate issues to successively higher levels of management if direct resolution fails, and to consider external reporting only after internal channels are exhausted.
Which of the following best describes the concept of 'independence' for external auditors under SEC rules?
Answer: The auditor must be free from financial or personal relationships that could impair objectivity
Auditor independence requires that the CPA firm and its personnel be free from financial interests, employment relationships, and other circumstances that could compromise objective, unbiased judgment.
What is the purpose of a whistleblower hotline in a corporate governance program?
Answer: To provide an anonymous channel for employees to report financial fraud or ethical violations
A whistleblower hotline gives employees, vendors, and others a confidential way to report suspected fraud, violations of law, or ethical breaches without fear of retaliation.
Under the Dodd-Frank Act's whistleblower provisions, what financial reward may SEC whistleblowers receive if their tip leads to a successful enforcement action exceeding $1 million?
Answer: 10% to 30% of the monetary sanctions collected
Dodd-Frank authorizes the SEC to pay qualifying whistleblowers between 10% and 30% of sanctions collected in successful enforcement actions that exceed $1 million in total monetary sanctions.
What does 'conflict of interest' mean in the context of corporate governance, and how should financial controllers handle it?
Answer: A situation where personal interests could impair professional judgment; must be disclosed and managed
A conflict of interest arises when personal interests (financial, relational, or otherwise) could influence — or appear to influence — a professional's objective decision-making and must be disclosed to management.