CFE – Fraud Prevention and Deterrence — Question 50

In developing a corporate governance framework for an organization, directors and management must consider which of the following?

Answer options

• A. The organization’s legal and regulatory environment
• B. The organization’s cultural environment
• C. The organization’s ethical environment
• D. All of the above

Correct answer: C

Explanation

The correct answer is C, as the ethical environment is crucial for guiding behavior and decision-making within the organization. While the legal and regulatory environment (A) and cultural environment (B) are important, the ethical framework fundamentally shapes how the organization operates and how it is perceived externally.