Compliance 101: Chap 3 Test
Questions with All Actual Detailed
Answers 2026-2027 Updated.
Why develop a compliance program? - Answer Promotes a culture of ethical behavior and
commitment to compliance with the law.
Aids in preventing and detecting wrong doing
Provides safe mechanisms for reporting and seeking help in getting it right the first time
Raises awareness of organizations expectations
Positive impact to corporate reputation/cultures public image
Compliance program influence - Answer 1970: bank corruption
1980: defense fraud
1990: health care fraud/oig focus and 1991 federal sentencing guidelines
2000: financial fraud/governance accountability-sarbanes/oxley act (Enron )
Sarbanes/oxley act - Answer The act is focused on financial controls however it also stated
that the governing board can't say they didn't know.
It incorporates the 7 elements and section 8
Requires transparency of senior leadership to the board-
(Remember :Enron )
7 elements of compliance plan - Answer Standards and procedures
Oversight
Educate and train
Monitor and audit
Reporting
Enforcement and discipline
Response and prevention
Reasons why people are non-compliant - Answer They don't what to expect
They didn't know
Yates memo - Answer The organization is accountable as well as the employees
,Board of Directors have what responsibility or duty? - Answer Board has care
responsibility /fiduciary responsibility
Delegates management to senior level
-understand program background
-fully engages in oversight of compliance plan
-adopts resolutions
Most common reporting for a compliance officer? - Answer Compliance officer has dotted
line to CEO/coo and direct to board or vice versa. Anything else dilutes the compliance officer
authority.
CO must have access to the board and report regularly
CO should be outside of management. Independent
Authority of compliance - Answer Cease and decease - stop a process that is compliant
What is a good compliance plan? - Answer A good compliance tries to show people why and
how to comply.
Element 1:standards and procedures - Answer Standards and procedures includes code of
conduct.
Should be simple, easy to understand and every employee should know how to use and follow
Readability should written in 6 grade readability
Employees should understand and sign code of conduct
Element 2: oversight - Answer Board has a responsibility to oversee organization
Element 3: educate and train - Answer If training is mandatory it should be enforceable
Annual training and ongoing
Help understand why it's important
Can be general or specific
Can require attestations
Element 4: monitor and audit - Answer Assists in detecting criminal conduct
Must be independent and objective
Monitoring is conducted by management
Audits must be independent
, Element 5: reporting - Answer There must be an ability to report non compliance- hotline.
Employees need to know how to report
Anonymous/confidential
Non retaliation
Address issues timely
Element 6: enforcement/discipline/incentives - Answer Incentives should be aligned with
being compliant. Performance reviews and compensation should have compliance metrics
identified
Consistency in enforcement
Element 7: respond and prevent - Answer Triage get and handling investigations
Element 7: respond and prevent (continued) - Answer Remediation efforts are timely and
adequately address the issue
2 common areas of remediation - Answer Education due to lack of knowledge
P&P due to unclear expectations and or written format
What are the 2 reasons why people don't report non compliance? - Answer 1: fear of
retaliation
2: perceived inaction
Role of compliance office - Answer Office should serve as catalyst to:
Build ownership and accountability for the program
Identify vulnerability
Lead the design of systems/processes to respond to needs and address controls
Code of conduct - Answer Company 's ethical attitude
Emphasis on compliance with all applicable laws and regulations
Applies to all employees
Tailored to culture,business and corporate identity
Should be concise and simple
Code of conduct -employee - Answer All employees should sign attestation annually
Questions with All Actual Detailed
Answers 2026-2027 Updated.
Why develop a compliance program? - Answer Promotes a culture of ethical behavior and
commitment to compliance with the law.
Aids in preventing and detecting wrong doing
Provides safe mechanisms for reporting and seeking help in getting it right the first time
Raises awareness of organizations expectations
Positive impact to corporate reputation/cultures public image
Compliance program influence - Answer 1970: bank corruption
1980: defense fraud
1990: health care fraud/oig focus and 1991 federal sentencing guidelines
2000: financial fraud/governance accountability-sarbanes/oxley act (Enron )
Sarbanes/oxley act - Answer The act is focused on financial controls however it also stated
that the governing board can't say they didn't know.
It incorporates the 7 elements and section 8
Requires transparency of senior leadership to the board-
(Remember :Enron )
7 elements of compliance plan - Answer Standards and procedures
Oversight
Educate and train
Monitor and audit
Reporting
Enforcement and discipline
Response and prevention
Reasons why people are non-compliant - Answer They don't what to expect
They didn't know
Yates memo - Answer The organization is accountable as well as the employees
,Board of Directors have what responsibility or duty? - Answer Board has care
responsibility /fiduciary responsibility
Delegates management to senior level
-understand program background
-fully engages in oversight of compliance plan
-adopts resolutions
Most common reporting for a compliance officer? - Answer Compliance officer has dotted
line to CEO/coo and direct to board or vice versa. Anything else dilutes the compliance officer
authority.
CO must have access to the board and report regularly
CO should be outside of management. Independent
Authority of compliance - Answer Cease and decease - stop a process that is compliant
What is a good compliance plan? - Answer A good compliance tries to show people why and
how to comply.
Element 1:standards and procedures - Answer Standards and procedures includes code of
conduct.
Should be simple, easy to understand and every employee should know how to use and follow
Readability should written in 6 grade readability
Employees should understand and sign code of conduct
Element 2: oversight - Answer Board has a responsibility to oversee organization
Element 3: educate and train - Answer If training is mandatory it should be enforceable
Annual training and ongoing
Help understand why it's important
Can be general or specific
Can require attestations
Element 4: monitor and audit - Answer Assists in detecting criminal conduct
Must be independent and objective
Monitoring is conducted by management
Audits must be independent
, Element 5: reporting - Answer There must be an ability to report non compliance- hotline.
Employees need to know how to report
Anonymous/confidential
Non retaliation
Address issues timely
Element 6: enforcement/discipline/incentives - Answer Incentives should be aligned with
being compliant. Performance reviews and compensation should have compliance metrics
identified
Consistency in enforcement
Element 7: respond and prevent - Answer Triage get and handling investigations
Element 7: respond and prevent (continued) - Answer Remediation efforts are timely and
adequately address the issue
2 common areas of remediation - Answer Education due to lack of knowledge
P&P due to unclear expectations and or written format
What are the 2 reasons why people don't report non compliance? - Answer 1: fear of
retaliation
2: perceived inaction
Role of compliance office - Answer Office should serve as catalyst to:
Build ownership and accountability for the program
Identify vulnerability
Lead the design of systems/processes to respond to needs and address controls
Code of conduct - Answer Company 's ethical attitude
Emphasis on compliance with all applicable laws and regulations
Applies to all employees
Tailored to culture,business and corporate identity
Should be concise and simple
Code of conduct -employee - Answer All employees should sign attestation annually
