Ethics - Chapter 3

Which of the following is NOT an underlying trait of character of an effective leader identified by Johnson? Compassion Temperance Reverence Confidence

Confidence

Which of the following is least likely to be used by a manager to set the right tone to foster ethical leadership? Reflect before deciding Make decisions that do not harm others Consider the implications of one's actions on themselves Make decisions that are universal

Make decisions that do not harm others

Corporate governance structures and relationships are shaped by internal and external mechanisms. Which of the following is an external mechanism? State and federal statues require a baseline corporate governance system Audit committees must consist of at least three members all of whom are independent of management and the entity All directors must be independent of management Each listed company must have an internal audit function

State and federal statues require a baseline corporate governance system

In the business world, the term disgorgement means: To give up one's board position after a fraud incident To give up one's meal after eating To return ill-gotten gains To return profits earned illegally

To return ill-gotten gains

The seven signs of a pending ethical collapse include all but: Conflicts of interest overlooked Whistleblowing hotline Pressure to make numbers Bigger than life CEO

Whistleblowing hotline

An ethical corporate culture includes: A culture of do what I say, not what I do A focus on results over process An explicit statement of values. Zero tolerance for individual and collective mistakes

An explicit statement of values

Section 302 of the Sarbanes-Oxley Act requires that management: Certify the financial statements Disclose all executive compensation Assess the company's internal controls Blow the whistle on corporate wrongdoing

Certify the financial statements

The relationship between the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy and rule of law is known as: Code of ethics. Corporate responsibility. Corporate governance. Corporate leadership.

Corporate governance.

The reporting requirements for fraud are detailed in Section 10A of the Securities Exchange Act of 1934. Which of the following steps are NOT part of a prescribed process that should be followed in deciding whether to report fraud? Determine whether reporting to the SEC is necessary. Determine who is responsible for the fraud. Determine whether appropriate remedial action has been taken. Determine whether the violations have a material effect, quantitatively or qualitatively, on the financial statements.

Determine who is responsible for the fraud.

Which of the following is not an element of an ethical corporate culture? Setting a proper tone at the top Having an effective external audit Establishing strong internal controls Having an effective internal audit function

Having an effective external audit

Which of the following is not a component of the Framework for Understanding Ethical Decision Making in Business? Ethical issue intensity Internal controls Business ethics intentions, behaviors, and evaluations Individual and organizational factors

Internal controls

As a manager in her firm, Lucy concerns herself with the effectiveness of internal controls. Her main focus is how efficient and effective the company's internal controls are over time. Which component of internal control is Lucy engaging in? Risk assessment Control environment Monitoring Control activities

Monitoring

Which of the following is NOT one of the audit committee's responsibilities? Review and monitor the effectiveness of the external audit process Review whistleblowing and compliance processes Review all financial reporting judgments Monitor the integrity of the financial statements

NOT - Review whistleblowing and compliance processes

A common ethical problem where there is an unrealistic expectation to meet expected results and the ends justifies the means can be best described as: Weak board of directors Pressure to maintain the numbers Loyalty to the boss Fear of reprisal

Pressure to maintain the numbers

Which of the following is not a fraud method to overstate revenues? Recording sales based on F.O.B. shipping point Recording future sales in the current period Recording sales of products that are out on consignment Recording revenues of other companies by acting as a middleman

Recording sales based on F.O.B. shipping point

External auditor communications with the audit committee include each of the following except: Shareholder returns Significant estimates made by management Matters related to why certain accounting policies are considered critical Significant unusual transactions

Shareholder returns

DeGeorge thinks that "corporations have a moral obligation not to harm." Which of the following would be one of his criteria for morally permitted whistleblowing? Documented evidence exists that would convince a reasonable and impartial observer that one's view of the situation is correct but that serious harm is unlikely to occur. The employee should report a firm's actions that will do serious and considerable harm to others to her supervisor, and keep reporting all the way up to board until the actions are corrected. The employee must first report wrongdoing to the external auditor before going public. The employee must reasonably believe that going public will not create the necessary change to protect the public and is worth the risk to oneself.

The employee should report a firm's actions that will do serious and considerable harm to others to her supervisor, and keep reporting all the way up to board until the actions are corrected.

Section 301 of the Sarbanes-Oxley Act requires Code of ethics requirements for senior officers The principle executive to certify that they have reviewed the financial statements A report of the company's internal control over financial reporting The establishment of procedures to accept employee complaints

The establishment of procedures to accept employee complaints