When you serve on the board of directors of a given company and you get paid for it (sth like $15000 for director’s fees). Do you need to disclose this to your employer and receive written permission from him?
Why is it false to say that “GIPS represents standard that members of CFAI and CFA candidates mus adhere to” while CFAI includes GIPS as part of its deontology???
For Q 1, it is necessary for you to disclose the board service to your employer. Handbook p114 provides three potential conflicts under this situation. For Q 2, I think GIPS is optional, not requirement. So the statement is false.
even if you don’t receive monetary compensations for being on a board, you should disclose it to your employer
that’s what i thought at first but as long as you or your employer don’t write report or do research about that company, you don’t have to disclose nor ask for permission
Yes but your duty as a board member could impact your ability to perform in your current role. Thus you need to disclose this. I remember reading this either in Schweser or the assigned reading.
I did a similar question and apparently you don’t need to disclose it, in my case, if your company’s not covering that company.
Ok, i’ve seen the first question, and you don’t need to disclose it under the additional compensation arrangement standard since you don’t cover the company. However, from the point of view of duties to employers (Standard IVA) you should still disclose this activity as it could impact your ability to work (less time etc…). As for the second question, compliance with GIPS is not a requirement but a recommendation. It could have been the correct answer if the others were “more false”, in which case it would have been the most likely correct, but still the word “must” in the sentence is incorrect.
So is additional compensation disclosure only aplicable when you get money from either a competitor or a client, but not if you do baby sitting services, for example? I agree that, for this anlayst serving on another company’e board he has to disclose his employment to avoid potential conflicts of interest, etc.
Well, in this particular case i remember that he was a fixed income analyst and the firm didn’t have any outstanding debt. So, even if he was in the board of directors and had discounts on buying ice-creams from the firm, this would not impair his ability to deal fairly with clients or his independence and objectivity. I think additional compensation disclosure is applicable in cases when you get money from competitors, clients or firms that you are covering (or might be reasonably expected to cover), which is not the case for this situation.
nhung.tran Wrote: ------------------------------------------------------- > When you serve on the board of directors of a > given company and you get paid for it (sth like > $15000 for director’s fees). Do you need to > disclose this to your employer and receive written > permission from him? You do need to disclose this to your employer, and you do need “written consent.” I remember there was a practice question on the CFA Sample exam that said a member informed his employer in writing and performed his outside service without hearing back from the employer. The answer was he was in violation of the standards. Refer to Standard V(B), page 75 of volume I. “Members and candidates must not accept gifts, benefits, compensation, or consideration that competes with, or might reasonably be expected to create a conflict of interest with, their employers’ interest unless they obtain written consent from all parties involved.”
nhung.tran Wrote: ------------------------------------------------------- > that’s what i thought at first but as long as you > or your employer don’t write report or do research > about that company, you don’t have to disclose nor > ask for permission You are incorrect on this.
There was a similar question like that in one of the schweser exams about a person being on the board of an icecream company and receiving discount on icecream when they visit the stores. The right answer was that he didn’t need to disclose any of the arrangements, which I thought was very odd. My suggestion is to discard all the schweser ethics questions beyond book 6, it just confuses you and doesn’t add too much value.
I agree with frangoya. Schweser is very inept at the ethics stuff. I’ve been getting around a 60% on the book 6 ethics but in the high 80’s on cfa versions.