CFA Level 1: Ethics - Accepting Gifts and Benefits

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Question

Ward is scheduled to visit the corporate headquarters of Evans Industries. Ward expects to use the information obtained to complete his research report on Evans stock. Ward learns that Evans plans to pay all of Ward's expenses for the trip, including the cost of meals, hotel room and air transportation. Which of the following actions would be the best course for Ward to take under the Code and Standards?

Answers

A. Accept the expense-paid trip and write an objective report.

B. Write the report without taking the trip.

C. Pay for all travel expenses, including costs of meals and incidental items.

D. Accept the expense paid trip but disclose the value of the services accepted in the report.

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Explanations

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A. B. C. D.

The best course of action, under Standard IV (A.3), Independence and Objectivity, is to avoid a conflict of interest whenever possible. Therefore, paying for all expenses is the correct answer. Merely disclosing the conflict is not as appropriate as avoiding the conflict of interest altogether. Writing an objective report would not remove the appearance of a conflict of interest. Not taking the trip is incorrect, because Ward would not be taking advantage of close inspection of the company and his report would not be using all the information available.

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