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

Which of the following measures is most likely to be part of an effective compliance system under Standard IV(C)?

Recurring training programs together with review of employee actions best reflect an effective compliance system. The guidance says such a system goes beyond enacting a code of ethics and includes procedures, regular education, and checking whether employees follow the rules.

  1. AA code of ethics that is enacted once and not reviewed
  2. BIncentives tied only to meeting business goals
  3. CRecurring training programs and review of employee actions to see whether rules are followedCorrect

Explanation

An effective system includes policies and procedures plus reviewing employee actions, and supervisors should implement education and training on a regular basis. Incentives should also reward ethical behavior, not business goals alone, and a code alone is insufficient.

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