Ethics ACNT 1370 Final All Chapters MC
The following need is at the top of Maslow's Hierarchy of Needs: a. Esteem b. Respect c. Fulfillment d. Safety e. Affinity
c. Fulfillment
If a professional accountant is billing an audit client for more hours than those actually worked, he will be violating the following fundamental principle: a. Objectivity b. Professional due care c. Integrity d. Confidentiality e. All of the above
c. Integrity
This approach presupposes that happiness, utility, pleasure, pain and anguish can be quantified: a. Deontology b. Distributive Justice c. Utilitarianism d. Moral Imagination e. Virtue Ethics
c. Utilitarianism
A professional accountant is auditing client A and providing consulting services to client B. Both clients are in the same industry. If the professional accountant uses specific information from client A's audit to prepare a business plan for client B, he will be violating the following fundamental principle: a. Integrity b. Objectivity c. Professional due care d. Confidentiality e. All of the above
d. Confidentiality
This approach, a variant of utilitarianism, considers an action to be ethically good if it will probably produce a greater balance of good over evil: a. Act Utilitarianism b. Active Utilitarianism c. Sub-Utilitarianism d. Consequentialism e. Virtue Ethics
d. Consequentialism
A Ponzi scheme, such as Bernie Madoff ran, is: a. A card game b. A sound investment scheme c. A scheme to improve the environment d. Hard to hide forever e. None of the above
d. Hard to hide forever
Which of the following is a source of risk identified by both the AICPA/CICA and the Institute of Internal Auditors: a. Environmental b. Informational c. Financial d. Operational e. All of the above
d. Operational
Due diligence programs developed to reduce penalties levied under the U.S. Federal Sentencing Guidelines for environmental harm did not include: a. Awareness programs for employees. b. Guidelines for employees. c. Compliance oversight by corporate officials. d. Rewards for non-compliance. e. Encouragement for whistleblowers.
d. Rewards for non-compliance
Most of the damage is usually done in this phase of a crisis: a. Pre-crisis b. Reputation restoration c. Controlled d. Uncontrolled e. Post-crisis
d. Uncontrolled
An employee in charge of counting and depositing cash holdings at end of the day urgently needs some extra cash to pay her son's medical bills. Using the fraud triangle, this situation likely constitutes: a. Motive b. Rationalization c. Opportunity d. (a) and (b) e. (a) and (c)
e. (a) and (c)
Corporations are now increasingly realizing that they are accountable: a. Legally to shareholders b. Legally to all stakeholders c. Strategically to additional stakeholders d. (a) and (b) e. (a) and (c)
e. (a) and (c)
Freddie Mac and Fannie Mae: a. Were created to support the U.S. housing market b. Stimulated the U.S. housing bubble c. Provided bailout funds to the U.S. government d. Acted in the best interest of consumers e. Acted in the best interest of lenders
e. Acted in the best interest of lenders
The crisis in investor confidence in 2002 was caused by: a.Lack of integrity of business leaders. b.Manipulation of financial results. c.Boards of Directors that did not provide proper oversight. d.Findings of alert auditors e.All of the above.
e. All of the above
This organization is developing an international code of conduct for professional accountant a. International Accounting Standards Board b. European Federation of Accountants c. Financial Accounting Standards Board d. Public Accounting Oversight Board e. International Federation of Accountants
e. International Federation of Accountants
This philosopher argued that social and economic inequalities are just if these inequalities are to everyone's benefit: a. Adam Smith b. John Locke c. Thomas Hobbes d. Jeremy Bentham e. John Rawls
e. John Rawls
Which of the following would be the least useful report of ethics risks and opportunities? a. By hyper-norm value b. By shareholder group c. By product or service d. By corporate objective e. By reputation driver
b. By shareholder group
Which the following best describes harassment? a. Improper behavior considered offensive by the victim, and the perpetrator knows that this is an offensive behavior b. Improper behavior considered offensive by society in general, and the perpetrator knows that this is an offensive behavior c. Improper behavior not considered offensive by the victim, and the perpetrator knows that this is an offensive behavior d. Improper behavior considered offensive by the victim, and the perpetrator does not know that this is an offensive behavior e. Improper behavior considered not offensive by the victim, and the perpetrator does not know that this is an offensive behavior
b. Improper behavior considered offensive by society in general, and the perpetrator knows that this is an offensive behavior
Why didn't investors caught in the Subprime Lending Crisis take earlier note of the risks inherent in investments known as collateralized debt as obligations (CDOs)? a. Greed and the desire for high returns. b. Banks were selling and buying them. c. Risks were buried in complex, jargon-oriented documents d. Risks were diversified over many mortgages e. Only three of the above
a. Greed and the desire for high returns
According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a motive for doing right: a. Pre-conventional b. Conventional c. Post-conventional d. Autonomous e. Principled
a. Pre-conventional
Which of these risks caused a 25% or more drop in share value between 1993 and 1998? a. Strategic b. Operational c. Financial d. Hazard e. Ethics
a. Strategic
Which of the following is not covered under the Sarbanes-Oxley Act of 2002 (SOX) ? a. The responsibilities of shareholders b. The responsibilities of the board of directors c. The responsibilities of management d. The responsibilities of auditors e. Conflicts of interest
a. The responsibilities of shareholders
According to Kohlberg, at this stage of moral reasoning, adherence to moral codes or to codes of law and order are a motive for doing right: a. Pre-conventional b. Conventional c. Post-conventional d. Autonomous e. Principled
b. Conventional
Which corporate report discusses subjects that include environmental, health and safety, philanthropic and other social impacts? a. Corporate annual report b. Corporate social responsibility report c. Corporate quarterly report d. Corporate stakeholder report e. Corporate ethics committee report
b. Corporate social responsibility report
An employee in charge of the cash register at a busy restaurant steals small sums of money at the end of the day whenever the cash in the register exceeds the sum of the day's bills. He thinks it is fine to do so because every day there are two or three costumers that pay more than they should. This type of rationalization is based on: a. Everyone else is doing it b. Denial of the victim c. Condemnation of the condemners d. Appeal to higher loyalties e. Entitlement
b. Denial of the victim
This theory argues that equals should be treated equally in relationship to their relevant equalities and differences: a. Deontology b. Distributive Justice c. Utilitarianism d. Moral Imagination e. Virtue Ethics
b. Distributive Justice
The difference between what the public thinks it is getting in audited financial statements and what the public is actually getting is known as a. Credibility gap b. Expectations gap c. Audit gap d. Stewardship gap e. None of the above
b. Expectations gap
The following are examples of ethics risks faced by employees a. Honesty and integrity b. Fairness and compassion c. Integrity and responsibility d. Fairness and integrity e. Responsibility and honesty
b. Fairness and compassion
What is the recommended strategy when stakeholders' potential for threat is LOW and the stakeholders' potential for cooperation is HIGH? a. Monitor b. Involve c. Discuss d. Defend e. None of the above
b. Involve
A collateralized debt obligation (CDO): a. Is an insurance policy that any investor can purchase b. Is a bond that is secured by a portfolio of mortgages c. Protects an investor in the event that the issuer of the mortgage defaults on the contract d. Acts as a hedge against changes in interest rates e. Were outlawed with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
b. Is a bond that is secured by a portfolio of mortgages
Not reporting environmental issues is an example of a. Lack of transparency b. Lack of integrity c. Lack of accuracy d. All of the above e. None of the above
b. Lack of integrity
Which of the following is NOT a dimension of the COSO Enterprise Risk Framework? a. Strategic b. Monitoring c. Operations d. Reporting e. Compliance
b. Monitoring
According to distributive justice theory, there are three main criteria for determining the just distribution: a. Need, fairness, and merit b. Need, arithmetic equality, and merit c. Opportunity, fairness, and merit d. Opportunity, fairness, and arithmetic equality e. Need, arithmetic equality, and equivalence
b. Need, arithmetic equality, and merit
If a professional accountant is auditing a public company and she receives company shares as payment for her audit services, she will be violating the following fundamental principle: a. Integrity b. Objectivity c. Professional due care d. Confidentiality e. All of the above
b. Objectivity
This organization issues auditing standards, carries out inspections of public accounting firms auditing U.S. public clients, and imposes sanctions when applicable: a. CPAB b. PCAOB c. SEC d. FASB e. AICPA
b. PCAOB
There are two aspects of justice, but under this aspect there should be a consistent application of law: a. Distributive justice b. Procedural justice c. Balance of justice d. Deontology e. Teleology
b. Procedural justice
Which of the following is NOT a component of the COSO Enterprise Risk Framework? a. Risk assessment b. Risk review c. Internal environment d. Information and communication e. Control activities
b. Risk review
Which of the following is not true? a. Principles are more useful than rules because principles can be interpreted as new circumstances require b. Rules are more useful than principles because rules can be interpreted as new circumstances require c. A blend of principles and rules is often optimal d. All of the above e. (a) and (c) only
b. Rules are more useful than principles because rules can be interpreted as new circumstances require
The recommendation of appointment and review of the external auditors by the audit committee is an example of: a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation b. Safeguards reducing the risk of conflict of interest between an auditor and management c. Safeguards reducing the risk of conflict of interest within a professional accounting firm's own systems and procedures d. All of the above e. (a) and (c) only
b. Safeguards reducing the risk of conflict of interest between an auditor and management
Effective crisis management could represent a. An opportunity to avoid costs b. An opportunity to change employee's perspectives on risk c. An opportunity to enhance the company's reputation d. All of the above e. None of the above
c. An opportunity to enhance the company's reputation
Which of the following is not a trend described in Chapter 1 as having an impact on the ethics of business? a. Directors' legal liability b. Management's stated intention to protect reputation c. Auditors' legal liability d. Management's assertions to shareholders on the adequacy of internal controls e. Management's stated intention to manage risk
c. Auditors' legal liability
An employee in charge of collecting tickets at the entrance of a movie theatre lets her friends enter the theatre without paying for tickets. She thinks it is fine to do so because the employees at the popcorn bar give free popcorn to their friends. This type of rationalization is because: a. Denial of responsibility b. Denial of the victim c. Everyone else is doing it d. Appeal to higher loyalties e. Entitlement
c. Everyone else is doing it
The following elements are essential features of a profession: a. Extensive training, license or certification, and provision of important services to society b. Extensive training, primarily intellectual skills, and representation by professional organizations c. Extensive training, provision of important services to society, and primarily intellectual skills d. License or certification, representation by professional organizations, and autonomy e. License or certification, autonomy, and provision of important services to society
c. Extensive training, provision of important services to society, and primarily intellectual skills
Ralph Nadar contributed to the lack of credibility of corporations by exposing their: a. Excessive bonus schemes b. Greed c. Poor car safety d. Poor environmental record e. "Seller beware" attitude of toy manufacturers.
c. Poor car safety
The following performance component recommended by the Global Reporting Initiative relates to customer health and safety, marketing communications and customer privacy: a. Labor practices b. Human rights c. Product responsibility d. Society e. Costumer rights
c. Product responsibility
The external review of an audit firm's quality control system is an example of: a. Safeguards reducing the risk of conflict of interest within the audit profession b. Safeguards reducing the risk of conflict of interest within a client c. Safeguards reducing the risk of conflict of interest within a professional accounting firm d. All of the above e. (a) and (c) only
c. Safeguards reducing the risk of conflict of interest within a professional accounting firm
Using partners who do not report to audit partners for the provision of non-assurance services to an assurance client would be an example of: a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation b. Safeguards reducing the risk of conflict of interest within a client c. Safeguards reducing the risk of conflict of interest within a professional accounting firm d. All of the above e. (a) and (c) only
c. Safeguards reducing the risk of conflict of interest within a professional accounting firm
In 1984, Edward Freemen published an article on stakeholder theory. Which of the following is not true? a. A firm needs the support of its stakeholders to enhance the firm's reputation. b. Stakeholder theory took years to mature. c. Stakeholder theory is not a useful framework for those interested in governance. d. Firms need stakeholders to achieve their corporate objectives. e. Stakeholder theory occurred at the same time as the rise in social and corporate activism.
c. Stakeholder theory is not a useful framework for those interested in governance
The U.S. Government created the Trouped Asset Relief Program TARP to: a. Bail out investors in U.S. financial firms and institutions b. Avoid a worldwide financial crisis c. Stimulate the U.S. economy d. Resolve the financial crisis in Iceland e. Make a profit on the ultimate sale of assets bought at a low value
c. Stimulate the U.S. economy
Professional Accountants, in their fiduciary role, owe primary loyalty to: a. The accounting profession b. The client c. The general public d. Government regulations e. All of the above
c. The general public
Professional Accountants, in their fiduciary role, owe their primary loyalty to a. The accounting profession b. The client c. The general public d. Government regulations e. All of the above
c. The general public
This philosopher argued that self-interest motivates people to form peaceful civil societies: a. Adam Smith b. John Locke c. Thomas Hobbes d. Jeremy Bentham e. John Rawls
c. Thomas Hobbes
A difficulty in applying this approach is identifying all possible stakeholders impacted by the decision: a. Deontology b. Distributive justice c. Utilitarianism d. Procedural justice/Consequentialism e. Virtue Ethics
c. Utilitarianism
Minority rights may be violated under this approach: a. Deontology b. Distributive Justice c. Utilitarianism d. Moral Imagination e. Virtue Ethics
c. Utilitarianism
This theory argues that the best ethical alternative is the one that will produce the greatest amount of happiness to the largest number of stakeholders: a. Deontology b. Distributive Justice c. Utilitarianism d. Moral Imagination e. Virtue Ethics
c. Utilitarianism
Which was the largest fraud or bankruptcy leading to the crisis of investor confidence in 2002? a.Enron b.Global Crossing c.WorldCom d.HIH Insurance e.Xerox
c. WorldCom
An employee who thinks he is being treated unfairly because he is regularly working unpaid overtime urgently, needs some extra cash. Using the fraud triangle, this situation likely constitutes: a. Motive b. Rationalization c. Opportunity d. (a) and (b) e. (a) and (c)
d. (a) and (b)
The adoption of the following measures would reduce the expectation gap and lessen public misunderstanding of the auditor's role a. Publish a statement of management responsibility b. Auditor to report annually to audit committee c. Expand audit report to clarify auditor's role and the level of assurance d. (a) and (b) e. (a) and (c)
d. (a) and (b)
The company's internal auditors and the Ethics Officer should report: a. Day-to-day to the CEO b. Day-to-day to the Audit Committee of the Board of Directors c. Regularly to the Audit Committee of the Board of Directors without management being present d. (a) and (c) e. (a) and (b)
d. (a) and (c)
The following value is NOT necessary for an accounting professional: a. Honesty b. Integrity c. Objectivity d. A primary commitment to self-interest e. All but one of the above
d. A primary commitment to self-interest
If managers use moral imagination to determine ethical alternatives, the decisions need to be good for: a. The individual b. The firm c. Society d. All of the above e. (a) and (b) only
d. All of the above
The following duties are essential to maintaining a fiduciary relationship in the accounting profession: a. Development and maintenance of required knowledge and skills b. Maintenance of trust c. Maintenance of an acceptable personal reputation d. All of the above e. (a) and (b) only
d. All of the above
Which of the following is not a sign of an ethical collapse within an organization, according to Marianne Jennings? a. Pressure to meet financial goals b. Hubris c. Nepotism, favoritism and hiring sycophants d. An open and candid organizational culture e. Weak boards of directors
d. An open and candid organizational culture
An important difference between anticipated and unanticipated crises is that: a. Unanticipated crises are easier to control than anticipated crises b. Unanticipated crises have a less negative reputational impact than anticipated crises c. Anticipated crises start much earlier than unanticipated crises d. Anticipated crises are less costly than unanticipated crises e. Anticipated crises have a longer uncontrolled period than unanticipated crises
d. Anticipated crises are less costly than unanticipated crises
A professional accountant has been the partner in charge of a particular audit client for the past eight years. This situation could result in the following threat to professional independence: a. Self-review b. Intimidation c. Advocacy d. Familiarity e. None of the above
d. Familiarity
The Dodd-Frank Wall Street Reform and Consumer Protection Act was created after the Subprime Lending fiasco to protect consumers from deceptive practices related to: a. Mortgages b. Credit cards c. Cars d. Financial derivatives e. All of the above
d. Financial derivatives
Ethical corporate behavior is expected to lead to a. Higher profitability in the short-term b. Higher profitability both in the short-term and long-term c. Lower profitability in the long-term d. Higher profitability in the long-term e. Lower profitability both in the short-term and long-term
d. Higher profitability in the long-term
A value that is almost universally respected by stakeholder groups is a. Super norm b. Alfa norm c. Value norm d. Hypernorm e. General norm
d. Hypernorm
This approach focuses on coming up with an innovative solution to an ethical dilemma: a. Deontology b. Distributive Justice c. Utilitarianism d. Moral Imagination e. Virtue Ethics
d. Moral Imagination
All of these are essential elements required to develop a culture of integrity EXCEPT: a. Clear communication b. Reinforcement of ethics c. A personal commitment by senior management d. The appointment of an ethics officer e. All of the above
d. The appointment of an ethics officer
Individuals may be ethical because of: a. Religious concerns b. Emotional attachment to other people c. Enlightened self-interest d. None of the above e. All of the above
e. All of the above
SOX contained sections with regard to the audit and/or audit committee that were designed to: a. Increase independence of management b. Increase the financial literacy of audit committee members c. Limit the conflicts of interest related to the services an auditor can perform d. Restrict the abilities of auditors to serve on the audit committee e. All of the above
e. All of the above
The U.S. Federal Sentencing Guidelines were introduced in 1991 to: a. Help judges formulate sentences. b. Avoid sentences that are too light. c. Signal potential sentences to executives and directors. d. Encourage executives and directors to avoid environmental damage. e. All of the above.
e. All of the above
The U.S. Internal Revenue Service (IRS) implemented Circular 230 to remedy problems found with regard to the marketing of tax shelters thought to: a. Have no other purpose except to reduce taxes. b. Have lower than 50% chance of success if challenged by the IRS. c. Not be in accordance with client's needs. d. Create fictitious losses. e. All of the above
e. All of the above
The following would be a key control function of the Board of Directors a. Set guidance and boundaries b. Appoint CEO c. Approve the sale of company's assets d. Decide on the company's auditor e. All of the above
e. All of the above
This organization can issue auditing standards in the U.S.: a. AICPA b. FASB c. SEC d. PCAOB e. All of the above
e. All of the above
Ethical investors in a corporation take the view that: a. The corporation should maximize profits b. The corporation's primary concern should be its impact on the environment c. Their investment should make a reasonable return d. The corporation should operate in an ethical manner e. Both c and d
e. Both c and d
This philosophical approach requires that an ethical decision depends upon the duty, rights, and justice involved: a. Consequentialism b. Virtue ethics c. Duty ethics d. Righteousness e. Deontology
e. Deontology
An employee in charge of writing checks to suppliers in a manufacturing firm steals small sums of money every month by writing himself a check for the total of the discounts he negotiates with the company's suppliers. He told his employer he wanted a raise and no raise was given. This type of rationalization is based on: a. Denial of responsibility b. Denial of the victim c. Condemnation of the condemners d. Everyone else is doing it e. Entitlement
e. Entitlement
Most large corporations do not consider these risks in a broad and comprehensive way a. Operational risks b. Reputational risks c. Credit risks d. Market risks e. Ethics risks
e. Ethics risks
This organization is developing an international code of conduct for professional accountants: a. International Accounting Standards Board b. European Federation of Accountants c. Financial Accounting Standards Board d. Public Accounting Oversight Board e. International Federation of Accountants
e. International Federation of Accountants
A new audit client was taken on by a professional accountant's firm. The fee for this client's audit engagement is significantly lower than that charged by the prior accountants. This situation could result in the following threat to professional independence: a. Self-review b. Intimidation c. Advocacy d. Familiarity e. None of the above
e. None of the above
What is the recommended strategy when stakeholders' potential for threat is HIGH and the stakeholders' potential for cooperation is HIGH? a. Monitor b. Involve c. Discuss d. Defend e. None of the above
e. None of the above
As a result of the spectacular stock market crash in 1929, the government implement the Securities Act of 1933 , the Securities Act of 1934 , as well as which of the following acts: a. Glass-Steagall Act b. Investment Advisers Act c. Gramm-Leach-Bliley Act d. All of the above e. Only a and b
e. Only a and b
A professional accounting firm has several audit and tax clients, however, a single client represents 40% of the firm's revenue. This situation could result in the following threat to professional independence: a. Self-review b. Intimidation c. Advocacy d. Familiarity e. Over-dependence
e. Over-dependence
Development of a comprehensive plan or framework for CSR requires that an organization consider all of these EXCEPT: a. Strategic goals b. How it wishes to appear as a corporate citizen c. The cultures its operations will encounter d. Interests of stakeholders e. The cost of the program
e. The cost of the program
This theory focuses on the moral character of the decision maker: a. Deontology b. Distributive Justice c. Utilitarianism d. Moral Imagination e. Virtue Ethics
e. Virtue Ethics
Two weaknesses of the following approach are (1) it is difficult to determine who demonstrates integrity in the workplace, and (2) it is difficult to choose between compassion and not betraying somebody's trust: a. Deontology b. Distributive Justice c. Utilitarianism d. Moral Imagination e. Virtue Ethics
e. Virtue Ethics
Which of the following demonstrated extraordinary hubris? a. Kenneth Lay b. Bernie Ebbers c. Arthur Andersen d. Scott Sullivan e. All of the above
a. Kenneth Lay
The overall requirement of the Internal Revenue Service Circular 230 is to ensure that tax professionals: a. Know their clients b. Always develop tax plans for their clients c. Make tax planning suggestions that, even if they don't have a chance of success, will save the client some money in the short-term d. Never develop tax shelters e. Only be professional accountants
a. Know their clients
Incomplete disclosure of the company's revenue recognition policy is an example of a. Lack of transparency b. Lack of integrity c. Lack of accuracy d. All of the above e. None of the above
a. Lack of transparency
An employee in charge of the customer service help line needs urgently some extra cash for paying his son's hospital bills. Using the fraud triangle, this situation likely constitutes: a. Motive b. Rationalization c. Opportunity d. (a) and (b) e. (a) and (c)
a. Motive
The Moral Standards Approach focuses on the following dimensions of the impact of a proposed action a. Net benefit to society, fair to all stakeholders, whether it is right b. Net benefit to society and whether it is legal c. Net benefit to society, fair to all stakeholders, whether it is legal d. Fair to most stakeholders and whether it is right e. Net benefit to society, fair to most stakeholders, whether it is right
a. Net benefit to society, fair to all stakeholders, whether it is right
Ethical dilemmas arise when: a. Norms and values are in conflict b. There is only one alternative course of action available c. Norms and values are not in conflict d. There are several theories of ethical decision making e. All of the above
a. Norms and values are in conflict
This philosopher argued that self-interest leads to economic cooperation: a. Adam Smith b. John Locke c. Thomas Hobbes d. Jeremy Bentham e. John Rawls
a. Adam Smith
Which of the following is not a fundamental principle in codes of conduct for professional accountants? a. Act in the client's best interest b. Objectivity and independence c. Maintain the good reputation of the profession d. Maintain confidentiality e. Not to be associated with misleading information
a. Act in the client's best interest
Ethics and ethical corporate culture should likely play a vital role in setting: a. Control environment b. Risk assessment c. Information and communication d. Monitoring e. Control activities
a. Control environment
A problem with this theory is that the categorical imperative does not provide clear guidelines for deciding what is right and wrong when two or more moral laws conflict and only one can be chosen: a. Deontology b. Distributive Justice c. Utilitarianism d. Moral Imagination e. Virtue Ethics
a. Deontology
This theory is concerned with the motivation of the decision maker rather than the consequences of the decision: a. Deontology b. Distributive Justice c. Utilitarianism d. Moral Imagination e. Virtue Ethics
a. Deontology
Under this approach what is important is that the decision was made for the right reasons: a. Deontology b. Distributive Justice c. Utilitarianism d. Moral Imagination e. Virtue Ethics
a. Deontology
Auditors are mandated to assess the client's risk of financial reporting fraud. Auditing standard SAS-99 considers the following a mandatory tool in fraud assessment: a. Discussion and brainstorming b. Fraud triangle c. Interviews with management d. Development of fraud training programs e. All of the above
a. Discussion and brainstorming