Question #19
Reading: Reading 42.4 Standards of Professional Conduct Guidance for Standards IV
PDF File: Reading 42.4 Standards of Professional Conduct Guidance for Standards IV.pdf
Page: 8
Status: Correct
Correct Answer: A
Question
Marc Feldman, a CFA Institute member, is treasurer of zippy.com, and is also Larry Goldman's boss. Feldman is informed of "accounting irregularities of an unknown origin" during an audit by zippy's external accounting firm. There are 3 individuals, including Goldman, handling the accounting function. According to the Code and Standards, Feldman should do all of the following EXCEPT:
Answer Choices:
A. terminate the accounting staff immediately and issue a press release describing the situation
B. leave the staff in their current jobs and increase supervision while the external auditors complete their work
C. conduct a thorough investigation of activities
Explanation
Standard IV(C) spells out responsibilities of supervisors in the Standards of Practice
Handbook. Since the investigation is ongoing, it would clearly be inappropriate to
terminate the entire accounting staff until their complicity in the wrongdoing is
established.