Compliance Quiz
How Well Do You Know Your Rules?
You may know your customer, but do you know your rules? Take the WS&T Compliance Quiz to find out. Below are 17 questions to test your knowledge of some of the more recent industry regulations. A special thank-you to Mike Carpenter, managing principal, Capco, and Margarita Brose, managing consultant, Risk and Compliance Group, IBM Business Consulting Services, for developing the quiz.
1. The most commonly used short name for the Sarbanes-Oxley Act regarding financial controls is:
a. Sarbanes
b. Sarbox
c. SOX
d. SOA
2. What law dictates the establishment of programs to protect against the laundering of money through the U.S. financial system?
a. Securities Exchange Act of 1934
b. Bank Holding Company Act of 1956
c. USA Patriot Act
d. Graham-Leach-Bliley Act
3. What is the length of time that the SEC requires customer account records to be preserved by exchange members, brokers and dealers following the closure of an account?
a. One year
b. Three years
c. Six years
d. Ten years
4. What records are not required to be kept by broker-dealers?
a. Blotters
b. Instant messages
c. Lunch menus
d. Arrest records
5. This Act seeks to assure the availability of reliable information about publicly traded securities.
a. Securities Exchange Act of 1934
b. Bank Holding Company Act of 1956
c. USA Patriot Act
d. Graham-Leach-Bliley Act
6. The discovery of industrywide malpractice often has led companies to create an ethics or compliance officer. Other actions by the courts and the legislature also have spurred companies to implement such programs. Which event did not influence these compliance or ethics programs?
a. Defense contractor scandal
b. Martha Stewart insider trading case
c. Mutual fund investigations by NYS attorney general
d. Federal sentencing guidelines
7. Pursuant to the Sarbanes-Oxley Act, public accounting firms preparing an audit report for a registered issuer must attest to:
a. Honesty of the chief financial officer
b. Internal controls assessment by management of the issuer
c. Cooperation of the firm during the audit
d. Cost of the audit
8. Basel II is an international accord addressing:
a. Bank capital requirements
b. Compliance programs
c. Electronic trading
d. International exchanges
9. Surveillance technology is used for many different types of compliance activities. What compliance activity is it not used for?
a. Anti-money laundering
b. Know Your Customer
c. New products
d. Insider trading
10. Which of the following is not a key requirement of SOX 404?
a. Assessing the effectiveness of internal controls and structure
b. Preparation of a management report on the control structure and its effectiveness
c. Securing an attestation from an external auditor on the effectiveness of your controls
d. Securing a weekly attestation from an independent corporate governance consultant on the effectiveness of your controls
11. SOX 302 requires a sign-off attesting to the accuracy of financial statements by:
a. CEO and CIO
b. CEO and CFO
c. CFO and CIO
d. CIO and CFO
12. Which of the following is not included in SEC 17a-4 regulations concerning e-mail storage:
a. E-mail must be stored in a non-rewritable format
b. E-mail must be stored in a non-erasable format
c. E-mail must be stored for one week and then erased
13. The USA Patriot Act was passed in:
a. 2000
b. 2001
c. 2002
d. 2003
14. Financial institutions must report all cash transactions greater than:
a. $1,000
b. $10,000
c. $100,000
d. $1,000,000
15. Under Sarbanes Oxley, the maximum penalty for intentionally certifying an inaccurate filing is:
a. 1 year in prison and a $10,000 fine
b. 2 years in prison and a $100,000 fine
c. 3 years in prison and a $1,000,000 fine
d. 20 years in prison and a $5,000,000 fine
16. According to NYSE Rule 446 concerning business continuity planning, firms must conduct a review of BCP procedures at least:
a. Weekly
b. Monthly
c. Semi-annually
d. Annually
17. A comprehensive BCP plan must include all of the following except:
a. Identification of all mission-critical systems and backup for such systems
b. Financial and operational risk assessments
c. Alternate communications between customers and the firm
d. Five reasons why the firm chose its corporate headquarters location
Answers Key on the next page
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