Qns on standards of practise regarding accepting gifts in qbank regarding, standards, different, question, solution

atate2007

Hi,

i have 2 questions from qbank which asks about is it correct to accept gifts and whether do we reject or accept it. It seems to me that it is giving conflicting answers. I like to seek advice on what should i take note?

The first ans for the 1st question seems like it ok to accept as long as i make a report
The second ans to the 2nd question states to reject the gift.
I like to seek advice on which solution is the correct one or what have i miss that results in 2 different scenarios, ' 1st question to accept and 2nd ans to reject'
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To comply with Standard IV(B), Additional Compensation Arrangements, members should do all of the following EXCEPT:

A) reject any outside compensation immediately because it is not appropriate to accept outside compensation in a business setting.

B) state the terms of oral or written agreements regarding the compensation and the duration of the agreement.

C) immediately make a written report to their employer specifying any compensation benefits they receive.


Your answer: A was correct!

There is no reason to reject any outside compensation immediately because it is inappropriate to accept it. However, all outside arrangements must be reported to the member’s employer.

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Judy Gonzales is a portfolio manager with Brenly Capital and works on Johnson Company's account. Brenly has a policy against accepting gifts over $25 from clients. The Johnson portfolio has a fantastic year, and in appreciation, the pension fund manager sent Gonzales a rare bottle of wine. Gonzales should:

A) return the bottle to the client explaining Brenly's policy.

B) inform her supervisor in writing that she received additional compensation in the form of the wine.

C) present the bottle of wine to her supervisor.


Your answer: B was incorrect. The correct answer was A) return the bottle to the client explaining Brenly's policy.

By not returning the bottle she would be violating the Standard on disclosure of conflicts to the employer, which states that employees must comply with prohibitions imposed by their employer.

dontknow1987

Oh i understand. Thanks

bluejazzy

The second question is specifically saying the firm has a policy against accepting gifts over $25 dollars. The bottle of wine is specified as rare. You can make the assumption that because a policy exists specifically highlighting not to accept gifts and names a monetary amount that a rare bottle of wine would exceed the $25 and be in direct conflict with the policy.

This is one of those read the entire question questions.

The most correct answer is A.

Maddin

Without having studied ethics in depth yet, I think it's probably that the 2nd question specifically states that accepting gifts is banned by that particular firm...There are certain situations where CFA guidelines let you accept gifts (as long as they are declared to your employer), but if your company prohibits this then their policy would override the CFA guidelines (because the policy is stricter - CFA sets minimum standards for charterholders, employers may be even tougher.) hope that makes sense.