ACC 4811 Ch 12

14. A "qui tam" court case can proceed to court only if: a. A private citizen has, or can arrange to have, adequate resources for pursuing the claim b. The government grants its approval for the lawsuit to proceed c. The government first refuses to pursue the case on its own initiative d. The government and the private citizen reach a joint agreement concerning the sharing of winnings and costs of litigation

a. A private citizen has, or can arrange to have, adequate resources for pursuing the claim

7. Which of the following is the most common type of whistleblower? a. An internal whistleblower b. An anonymous, external whistleblower c. An external whistleblower who self-identifies himself to the general public d. An external whistleblower who identifies himself to governmental authorities but requests nondisclosure to the general public

a. An internal whistleblower

26. Under the Dodd-Frank Act, the SEC will pay financial rewards to: a. Angry employees who act out of revenge against their employer b. The General Counsel who serves as a corporation's chief attorney c. Outside auditors who discover securities violations during the course of performing audit duties d. Internal auditors who provide information about altered or destroyed documents that otherwise would not have been discovered by the federal authorities

a. Angry employees who act out of revenge against their employer

When an external auditor suspects that personnel at an audit client have committed an illegal act, the auditor has a duty to: a. Evaluate whether top management explicitly or implicitly authorized the act b. Ignore the act if it concludes that the act has no financial statement effect c. Confront the particular person suspected of committing the offending act d. Report the act to the SEC of the audit client is a public company

a. Evaluate whether top management explicitly or implicitly authorized the act

6. A company has an "Internal Whistleblower of the Year" award and intends to announce the employee who won the accompanying $25,000 cash prize at the company's annual employee awards banquet. The company: a. May not do so without getting the employee's permission b. May not do so, even if it obtains the employee's permission c. May do so to encourage others to employees to speak out d. May do so based on the "honorary award" exception in the Sarbanes-Oxley Act

a. May not do so without getting the employee's permission

31. To qualify for financial rewards as a whistleblower under the Dodd-Frank Act, an informant must: a. Provide original information concerning a securities law violation b. Provide material information about false or fraudulent accounting reporting c. Identify the particular securities law that a company has violated d. Provide information that results in a recovery for the federal government about any violation of federal law

a. Provide original information concerning a securities law violation

25. Under its whistleblower program, the IRS does not welcome information from: a. Tax return preparers regarding their clients b. Angry spouses who are upset with their ex-spouses c. Corporate cost accountants who lack tax training and expertise d. Individuals who participated in any manner in acts that helped to generate unreported taxable income

a. Tax return preparers regarding their clients

19. Two whistleblowers reported perceived tax evasion to the IRS. The first whistleblower estimates that the amount of underpaid taxes is $50,000. The second whistleblower estimates that the amount of underpaid taxes is $4 million. Which of these two whistleblowers is most likely to be an altruistic whistleblower? a. The first whistleblower. b. The second whistleblower c. Both are equally likely d. Neither, because they both obviously are motivated by the prospect of financial rewards

a. The first whistleblower.

17. The concept of "qui tam": a. Was first established in the United States by the False Claims Act and has been mimicked by various state laws b. Was first established in the United States by the False Claims Act, but gained widespread application when it was enacted as a core element of the Sarbanes-Oxley Act c. Is an effective deterrent in Europe against accounting fraud and, according to critics, should be adopted in the United States d. Enables the SEC to recover an equal share of all investor recoveries obtained in private investor lawsuits

a. Was first established in the United States by the False Claims Act and has been mimicked by various state laws

18. Which of the following provisions of the Dodd-Frank Act encourages internal whistleblowing? a. Whistleblowers customarily are given a greater reward percentage if they first reported internally before reporting externally b. External whistleblowers who became aware of corporate misconduct while working as a corporation's employee may not collect a financial reward for providing that information to governmental authorities c. Whistleblowers qualify to receive financial rewards only if they first reported their concerns internally before reporting them externally d. Whistleblowers receive anti-retaliation protections only if they first reported their concerns internally before reporting them externally

a. Whistleblowers customarily are given a greater reward percentage if they first reported internally before reporting externally

11. The Code of Conduct adopted by the Institute of Management Accountants: a. Strongly encourages external whistleblowing b. Discourages external whistleblowing c. Requires its members, prior to becoming external whistleblowers, to first determine with a high degree of certainty that a violation of law has occurred d. Frequently has been criticized by commentators for failing to provide any guidance on when members should, or should not, be external whistleblowers

b. Discourages external whistleblowing

29. "Pretextual retaliation" by an employer against an employee arises when: a. An employee suffers lost wages due to retaliation b. Disguised intent is present c. Objective intent is present d. An employer had decided to terminate an employee before the employee had become a whistleblower informant

b. Disguised intent is present

28. Which of the following are permitted to collect financial rewards as informants under the Dodd-Frank Act? a. Non-partner staff members of an audit team who provide information learned during the course of working on an audit b. Foreign citizens who do not reside in the United States c. Internal auditors who currently work for the company on which they are informing d. Internal auditors who formerly worked for the company on which they are informing

b. Foreign citizens who do not reside in the United States

1. Corporate employees who become whistleblowers are most likely to become: a. Internal whistleblowers who initially contact a company hotline b. Internal whistleblowers who initially contact their immediate supervisor c. Internal whistleblowers who initially contact the company's Audit Committee d. Internal whistleblowers who initially contact the company's General Counsel office

b. Internal whistleblowers who initially contact their immediate supervisor

4. To encourage interested parties to report fraudulent accounting practices, a company maintains a whistleblower hotline. A person left a message on this hotline anonymously, but the company's Chief Regulatory Compliance Officer was able to identify this caller based on her voice and surrounding facts. As a result, the company may: a. Not disclose this caller's identify under any circumstances b. Not disclose this caller's identity if the caller is a company employee c. Not disclose this caller's identity until after the investigation concerning accounting fraud is completed d. Not disclose this caller's identity until after the investigation concerning accounting fraud is completed and resolved in the company's favor

b. Not disclose this caller's identity if the caller is a company employee

8. According to statistics on external employee whistleblowers, the least important factor that motivates them to bypass internal company reporting mechanisms is: a. The belief that internal reporting would be futile and not result in needed corrective actions b. The desire for monetary rewards c. Fear of retaliation d. Past experiences in which they or others were retaliated against

b. The desire for monetary rewards

15. Many potentially successful "qui tam" cases never are asserted in court because: a. The government does not have adequate available resources for pursuing the lawsuit b. The private citizen who desires to assert the court case cannot afford the time and expense of litigation c. The private citizen who wishes to bring the lawsuit cannot demonstrate that an accounting fraud violation did in fact violate the Sarbanes-Oxley Act d. The private citizen and the government do not successfully negotiate a joint profit-sharing arrangement for dividing prospective lawsuit winnings

b. The private citizen who desires to assert the court case cannot afford the time and expense of litigation

12. In Europe, the mandatory duty to become an external whistleblower has been criticized on grounds of: a. Management participation b. The self-review threat c. Employee privacy d. Enterprise privacy

c. Employee privacy

36. If an auditor discovers that a suspected illegal act involving financialstatement preparation occurred at a client, the auditor has a duty to: a. Never inform management to prevent management from potentially engaging in a cover-up b. Inform management, unless the auditor suspects that management is involved c. Inform the company's Audit Committee d. Determine if key client financial personnel were involved in the misconduct

c. Inform the company's Audit Committee

2. For employees who work in a corporation, which of the following are more common? a. Vertical whistleblowers b. Horizontal whistleblowers c. Internal whistleblowers d. External whistleblowers

c. Internal whistleblowers

5. To encourage reports of abusive securities law violations, a company maintains an internal whistleblower hotline. The hotline allows callers to identify themselves or to remain anonymous. A caller, who identified himself by name and company job title, recently informed the company that the actuarial assumptions underlying its expected employee turnover was wrong. The caller then left a second, more detailed message in which the accrued impact of this mistake on the company's Estimated Future Liability for Workers' Compensation clams was estimated. The caller's estimates were correct, but the amount of the error was determined by the company to have arisen due to an innocent mistake and the amounts were immaterial to the company's financial statements. Accordingly, under the Sarbanes-Oxley Act, the company: a. May disclose the caller's name if the company does so out of a sincere desire to discourage wasteful calls about immaterial matters b. May disclose the caller's name, without restriction c. May not disclose the caller's identity under any circumstances d. May not disclose the caller's name, but may disclose in general terms his job title and the degree to which he had access to internal company records

c. May not disclose the caller's identity under any circumstances

3. A company maintains a whistleblower hotline to encourage reports of abusive accounting practices within the company. The hotline allows callers to identify themselves or to remain anonymous. Under the Sarbanes-Oxley Act, if a caller provides his or her identity, this identity may: a. Not be disclosed by the company if the caller is a company supplier b. Not be disclosed by the company if the caller is a company customer c. Not be disclosed by the company if the caller is a company employee d. Not be disclosed, even if the caller is an individual who is acting on behalf of a supplier, customer, or employee

c. Not be disclosed by the company if the caller is a company employee

13. If a "qui tam" lawsuit is victorious, the private citizen who initiated the lawsuit: a. Receives all proceeds from the victory, after the government recovers its costs in providing attorney representation b. Receives a majority of the winnings that remain after all legal fees and costs have been paid c. Receives a modest fraction of the winnings that remain after all legal fees have been paid d. Does not directly participate in the winnings, which is why "qui tam" loosely means "acting altruistically for the adoration of the king"

c. Receives a modest fraction of the winnings that remain after all legal fees have been paid

10. If a person serves in a high-ranking financial reporting oversight role at a corporation, whistleblowing concerning accounting fraud is mandatory, in accordance with rules imposed by: a. The Sarbanes-Oxley Act b. The Dodd-Frank Act and subsequent amendments c. The European Commission, with regard to officials subject to its jurisdiction d. The SEC, with regard to officials of companies subject to its jurisdiction

c. The European Commission, with regard to officials subject to its jurisdiction

22. In which of the following situations will a corporate employee not be able to collect under the IRS Whistleblower Program? a. The corporate employee violated the confidentiality provision in an employee Code of Conduct or personnel manual b. The employee received the information from her spouse, who also works at the company c. The amount recovered by the IRS is an $800,000 principal amount, plus $300,000 of interest d. The information reported by the employee was unknown to the IRS, but nonetheless was available publicly

c. The amount recovered by the IRS is an $800,000 principal amount, plus $300,000 of interest

20. A corporation engaged in an illegal maneuver that lowered its reported Tax Expense on its financial accounting income statement and allowed it to receive an excessively high tax refund from the IRS. An employee who works for this company potentially can recover a whistleblower reward: a. Only under the IRS Whistleblower Program b. Only under the Dodd-Frank Whistleblower Program c. Under both whistleblower programs d. Under no program whatsoever due to the breach of the duty of confidentiality

c. Under both whistleblower programs

21. During the course of working as an internal auditor, Samir discovered that Kavita Corporation engaged in an illegal maneuver that lowered its reported Tax Expense on its financial accounting income statement and allowed it to receive an excessively high tax refund from the IRS. Samir potentially can recover a whistleblower reward: a. Only under the IRS Whistleblower Program b. Only under the Dodd-Frank Whistleblower Program c. Under both whistleblower programs d. Under no program whatsoever due to its breach of the duty of confidentiality

c. Under both whistleblower programs

23. A corporation engaged in an illegal maneuver that lowered its reported Tax Expense on its financial accounting income statement and allowed it to receive an excessively high tax refund from the IRS. An accountant staff employee who oversee the company's accounts receivable potentially can recover a whistleblower reward: a. Only under the IRS Whistleblower Program b. Only under the Dodd-Frank Whistleblower Program c. Under both whistleblower programs d. Under no state or federal program whatsoever due to its breach of the duty of confidentiality

c. Under both whistleblower programs

30. The former CFO of a company gave the IRS information that resulted in the IRS collecting $1.2 million in unpaid taxes from this company. What is the maximum potential award that the IRS will give this informant? a. $60,000 b. $180,000 c. $360,000 d. $0

d. $0

34. Under the Dodd-Frank Act, a whistleblower who reports original information that materially assists the SEC in recovering ill-gotten gains relating to securities violations is entitled to: a. A minimum submission fee, plus a percentage of the SEC's recovery b. A percentage of the SEC's recovery c. A percentage of the SEC's recovery only if the amount recovered involved fraud d. A percentage of the SEC's recovery only if the amount recovered exceeds a specified threshold

d. A percentage of the SEC's recovery only if the amount recovered exceeds a specified threshold

35. A whistleblower who reports publicly-available information to the IRS that materially assists the IRS in recovering unpaid taxes is entitled to: a. No financial recovery at all b. A percentage of the SEC's recovery c. A percentage of the SEC's recovery only if the amount recovered involved fraud d. A percentage of the SEC's recovery only if the amount recovered exceeds a specified threshold

d. A percentage of the SEC's recovery only if the amount recovered exceeds a specified threshold

16. Which of the following, according to research studies, motivates company employees to become external whistleblowers? a. A desire for revenge b. A desire for financial rewards c. A desire to avoid guilt by association d. All of the above

d. All of the above

38. If an internal auditor discovers a suspected illegal act involving financial statement presentation at the company she serves, the internal auditor: a. Has a duty to inform her supervisor, even if she suspects her supervisor was aware of, and permitted, this act to occur b. Has a duty to report this misconduct to the SEC if she serves a client that is a publicly traded company c. Has the opportunity to collect a significant reward under the Dodd-Frank Act if the she informs the SEC d. Cannot collect a reward, even if the SEC ultimately recovers substantial sums as a direct result of information supplied to it by the internal auditor

d. Cannot collect a reward, even if the SEC ultimately recovers substantial sums as a direct result of information supplied to it by the internal auditor

27. An informant's identity will not be vigorously protected: a. By the IRS, under its whistleblower program b. By the SEC investigators, under the SEC's whistleblower program c. By appointed SEC officials d. In connection with "qui tam" claims

d. In connection with "qui tam" claims

37. If an auditor discovers a suspected illegal act involving financial statement presentation occurred at a client, the auditor has a duty to: a. Consult with outside legal counsel to determine if the act is in fact illegal b. Not mention this suspected misconduct, unless the illegality of the act is, at minimum, determined to be probable c. Not mention this suspected misconduct, unless the resulting monetary liability can be determined with reasonable certainty d. Inform the company's Audit Committee

d. Inform the company's Audit Committee

The IRS grants anti-retaliation protection to: a. Only informants who had a reasonable belief that a tax law violation had occurred b. Only informants who correctly identified that a tax law violation had occurred c. Only informants whose information resulted in the IRS recovering unpaid taxes d. No informants under any circumstance

d. No informants under any circumstance

A new staff accountant who works for Elderweyer Corporation signed a two-year employment contract. This contract states that it "shall be renewed annually, at a salary increase of 15%, as long as the employee has complied with all companies policies throughout the year." One such company policy states that "employees may not participate as informants, and not materially assist others as informants, under any whistleblower program that pays compensation for information that may lead to adverse consequences for Elderweyer Corporation." This company policy is: a. A sound business practice, from a public policy perspective b. Enforceable with regard to senior corporate officers, but not enforceable with regard to this new staff accountant c. Enforceable with regard to corporate officers who are able to influence the content of financial statements, but not enforceable with regard to this new staff accountant d. Not enforceable under any circumstances

d. Not enforceable under any circumstances

9. The AICPA Code of Professional Conduct: a. Makes whistleblowing concerning perceived illegal acts mandatory only if the amounts involved are material to a company b. Makes whistleblowing concerning perceived illegal acts mandatory only if the whistleblower is both a CPA and a company employee c. Does not make whistleblowing mandatory by CPAs working in industry, but the Integrity and Objectivity Rule expressly encourages it d. Tends to discourage it due to the duty of confidentiality

d. Tends to discourage it due to the duty of confidentiality