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

A supervisor at an asset manager finds the firm has no compliance system and cannot adequately supervise her team. According to Standard IV(C), the supervisor should most likely:

She should decline supervisory responsibility until the firm adopts reasonable procedures. Standard IV(C) says that when a supervisor clearly cannot discharge her duties because compliance systems are absent or inadequate, she must report this to senior managers and decline the role until procedures are adequate.

  1. Adecline supervisory responsibility until the firm adopts reasonable proceduresCorrect
  2. Bcontinue supervising informally and rely on her own judgment
  3. Cwait until a violation occurs before raising the issue with senior managers

Explanation

A supervisor must bring an inadequate compliance system to the attention of senior managers and recommend corrective action. If she clearly cannot discharge her duties because of the absent or inadequate system, she should decline supervisory responsibility until reasonable procedures are adopted. Waiting for a violation is inconsistent with this.

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