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CFA Level I · CFA Level I Exam · Guidance for Standard IV: Duties to Employers

A head of research with a large team cannot personally evaluate every analyst's conduct continually. Which action is most appropriate under Standard IV(C)?

The head of research should delegate to subordinates and instruct them on methods to promote compliance, including preventing and detecting violations. Delegation is permitted for large groups, but the duty remains, and enacting a code of ethics alone is not an effective compliance system.

  1. ADelegate supervision to subordinates and instruct them on methods to promote compliance, including preventing and detecting violationsCorrect
  2. BDelegate supervision to subordinates and consider the duty under the Standard discharged once delegation is made
  3. CRely on the firm's written code of ethics alone, as enacting it fulfills the supervisory duty in full

Explanation

Supervisors of large groups may delegate to subordinates who directly oversee employees, but their responsibilities include instructing those subordinates about methods to promote compliance. Delegation alone does not end the duty, and an effective system goes beyond enacting a code of ethics.

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