Hello All, I wonder if anyone wouldn’t mind sharing their insight w.r.t the below questions regarding travel / hotel arrangements. Your help is much appreciated
Q1) Roger Smith, CFA, has been invited to join a group of analysts in touring the riverboats of River Casino Corp. For the tour, River Casino has arranged chartered flights from casino to casino since commercial flight schedules are not practical for the group’s time schedule. River Casino has also arranged to pay for the analyst’s lodging for the three nights of the tour. According to CFA Institute Standards of Professional Conduct, Smith:
A. may accept the arrangements as they are.
B. may accept the flight but is required to pay for his lodging.
C. is required to pay for his flight and lodging.
Answer: A
I thought answer B as the CFA curriculum mentions that when attending an issuers HQ’s, members/candidates should pay for their own commerical transportation & hotel charges.
The answer (A) to the below question (Q2) even states that analysts on company visits pay their own travel expenses and use conmercial transportation if it is available.
Am I missing something here?
Q2) Peter Taylor, a CFA charterholder and a food industry analyst for a large investment firm, has been invited by Sweet Pineapple Co. to visit the firm’s processing plants in Hawaii. The standard concerning independence and objectivitity recommends that Taylor:
A. use and pay for commerical transportation if available.
B. obtain written permission from his employer before he accepts this invitation.
C. decline this invitation if he issues recommendations on the firm’s securities.
Scheduled flights are not practical so the analysts may use the chartered flights as long as it is for business purposes only.
Additionally, the lodging is for work purposes and not for the analysts travel and leisure. If the room accommodations were for 4 nights and the analysts were there for business purposes for only three nights, then the analysts should personally expense the fourth night.
Again this is subjective in nature. If the analysts were out on business, but they were going to lavish sporting events and restaurants this would call into question their objectivity. However, as the question stands this is not the case.
Hi Joe35y, what I was trying to say is that the answers to these questions some what contradict each other.
I.e. Question 1 - let the firm pay for travel expenses.
Question 2 - pay for commerical transportation yourself + the answer gives the following explanation: when attending an issuers HQ’s, members/candidates should pay for their own commerical transportation & hotel charges.
If you were to adhere to the explanation given in Q2 - you would have chosen answer B to question 1. Please let me know if I’m making any sense.
Yes exactly, if both say recommend to pay for flight and lodging, what is the approach to take?
Because like you say it says recommended, so therefore not required, Q1) Answer A - accept paid arrangements
Q2) As it is recommended, and not required… I will follow the same approach - get written permission from employer and accept paid travel arrangements.
However, that is wrong. In this case, the answer is to pay yourself.
You can see there is a contradiction between these 2 sets of questions/ answers. Following the same approach for one leads to a different answer for the other and vise versa.
The trick is on the words used. The first question, answer A tells you “you may accept those”, and according to the standards, yes, you may, even if it is not recommended.
The second question, it says specifically in the question “what do the standards recommend”? and they clearly recommend the analyst to pay for his stuff.
