Skip to content

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

The head of a large investment division oversees several hundred employees and cannot personally evaluate their conduct. Which action is most consistent with Standard IV(C)?

The division head should delegate supervisory duties to direct supervisors and instruct them in methods to prevent and detect violations. Delegation is permitted for large staffs, but the responsibility to instruct delegates remains, and a code of ethics alone is insufficient.

  1. ADelegate supervisory duties to subordinates who directly oversee employees, and instruct them on methods to prevent and detect violationsCorrect
  2. BDelegate supervision and rely on the delegates' own judgment without giving instruction, since responsibility transfers to them
  3. CLimit supervision to adopting a code of ethics, because an effective compliance system needs nothing further

Explanation

Supervisors of large numbers of employees may delegate to subordinates who directly oversee others, but their responsibilities include instructing those subordinates about methods to promote compliance, including preventing and detecting violations. An effective system goes beyond enacting a code of ethics.

Did you get it right without looking?

One question tells you little. A timed set on Guidance for Standard IV: Duties to Employers shows your real accuracy, how long you take and where you lose marks.

Practise Guidance for Standard IV: Duties to EmployersFree diagnostic mock

More Guidance for Standard IV: Duties to Employers questions