Ethics final

Which moral philosophy evaluates the morality of an action on the basis of the equity, fairness, and impartially of the action, with no rules serving as guidelines in the decision making process A. The relative prospective B. Act deontology C. Act utilitarianism D. Rule deontology E. Rule utilitarianism

B. Act deontology

Conflicts of interest exist when employees must choose whether to A. Advance the interests of the organization or those of society B. Advance their own personal interests, those of the organization, or those of some other groups C. Communicate in ways that deceive, manipulate, or conceal facts in order to harm others D. Carry out an assignment they perceive to be unethical E. Report an unethical coworker to outside authorities

B. Advance their own personal interests, those of the organization, or those of some other groups

To which group can a CPA provide audit documentation without being subpoenaed and without client's consent? A. The IRS B. Another CPA firm performing a peer review C. Another CPA firm considering the purchase of the auditing firm D. The FASB

B. Another CPA firm performing a peer review

Laws and regulations change over time; however, in the US the trust of most business legislations can be summed up as A. Any practice is permitted B. Any practice is permitted that does not substantially reduce competition and harm consumers or society C. Any practice is permitted that does not substantially harm consumers or society, but this applies only within the US D. Any practice is permitted that does not harm the environment E. Any practice is permitted that does not break the law

B. Any practice is permitted that does not substantially reduce competition and harm consumers or society

The SEC requires companies to disclose fees paid to independent public accounting firms for audit and consulting services in the belief that A. Such disclosures will end the practice of the auditors performing non-audit services for audit clients B. Client directors and financial statement users should consider all aspects related to auditor's independence and information about fees is important C. Audit firm consulting on client's accounting information processing system essentially impairs audit independence D. Financial analysts will attribute for less credibility to financial statements audited by public accounting firms that earn substantial non-audit fees from the audit team

B. Client directors and financial statement users should consider all aspects related to auditor's independence and information about fees is important

What type of fraud involves intentional deception on the part of an individual or group in order to derive an unfair economic advantage over an organization? A. Product B. Consumer C. Channel D. Conventional E. Accounting

B. Consumer

In the past 50 years, scholars developed and attempted to measure at least 164 distinct definitions of culture with recent reviews indicating that the number of definitions has been increasing while these definitions of culture vary greatly, they share common elements. Which of these is not one of them A. Culture is shared among individuals belonging to a group or organization B. Culture is formed over a relatively short period of time C. Culture is shared among individuals belonging to a society D. Culture is relatively stable E. Culture is formed over a relatively long period of time

B. Culture is formed over a relatively short period of time

An organization that delegates decision-making authority as far down the chain of command as possible and has relatively few formal rules is A. Centralized B. Decentralized C. Unethical D. Tall E. Ethical

B. Decentralized

Which of the following was developed in the 1980s to guide corporate support for ethical conduct by establishing a method for discussing best practices A. US Sentencing Commission B. Defense Industry Initiative on Business Ethics and Conduct C. Corporate codes of conduct D. The Southern Common Market E. Federal Sentencing Guidelines for Organizations

B. Defense Industry Initiative on Business Ethics and Conduct

Which moral philosophy is based on the premise that equal respect must be given to all persons A. Teleology B. Deontology C. Egoism D. Utilitarianism E. The relativist perspective

B. Deontology

___ reflects the integrity of decisions made and is a function of many factors A. Moral intensity B. Ethical culture C. Ethical awareness D. Corporate culture E. Organizational environment

B. Ethical culture

An auditor selected items from the client's detailed inventory listing. During the physical inventory observation, the auditor then found each item selected and counted the number of units on hand. Assuming that the amount on hand was the same as the amount in the client's detailed inventory listing, this procedure most likely would provide evidence concerning management's assertion of A. Rights and obligations B. Existence C. Presentation and disclosures D. Valuation E. Completeness

B. Existence

During the 1990w, the institutionalization of business ethics was largely driven by which piece of legislation A. UN global Compact B. Federal Sentencing Guidelines for Organizations C. Doss-Frank Wall Street Reform and Consumer Protection Act D. SOX E. Foreign Corrupt Practices Act

B. Federal Sentencing Guidelines for Organizations

Anti-competitive strategies that focus on weakening or destroying a competitor have spurred antitrust legislation and include all of the following except A. Sustained price cuts B. Free sample C. Discriminatory pricing D. Price collusion E. Corporate espionage

B. Free sample

The SOX act A. Only applies to firms with over 50 employees B. Has institutional internal whistle-blowing C. Was eventually replaced with the Dodd-Frank Act D. Requires all organizations to make their financial information public E. Involves too many complicated steps for it to be feasible for most organizations

B. Has institutional internal whistle-blowing

Individuals. often from the same department, who have a common interest but not an explicit organizational structure are known as A. Quality circles B. Informal groups C. Teams D. Work groups E. Committees

B. Informal groups

Which of the following was not a provision of the SOX Act A. It created accounting oversight board that requires corporations to establish codes of ethics for financial reporting B. It outlawed bribery of officials in other countries C. It made securities fraud a criminal offense D. It stiffened penalties for corporate fraud E. It required top executives to sign off on their firms' financial statements

B. It outlawed bribery of officials in other countries

Lauren hires Humphrey, a CPA, to audit her financial statements. The engagement letter includes a statement acknowledging that audited financial statements will be provided to financial institutions for a loan, but does not name any financial institutions. Humphrey completes the audit and issues an unqualified opinion. Based on the audited financial statements, Bank approves the loan for lauren. 4 months laster lauren files for bankruptcy. Bank would most likely sue Humphrey claiming A. It was a primary beneficiary B. It was foreseen party C. It was in privity of the contract D. It was a foreseeable party

B. It was foreseen party

Mandated boundaries of conduct are imposed by A. A legal system B. Core principles C. Voluntary actions D. Norms and artifacts E. Values and principles

A. A legal system

According to the ethical standards of the profession, which of the following acts is generally prohibited? A. Accepting a commission for recommending a product to an audit client B. Accepting engagements obtained through the efforts of third parties C. Purchasing a product from a third party and reselling it to a client D. Writing a financial management newsletter promoted and sold by a publishing company

A. Accepting a commission for recommending a product to an audit client

The SOX act of 2002 requires that the key company officials certify the financial statements. Certification means that the company CEO and CFO must sign a statement indicating A. All of these B. They have read the financial statements C. They are not aware of any false misleading statements D. They believe that the financial statements present an accurate picture

A. All of these

When conducting an audit Larson CPA failed to detect material misstatements included in the client's financial statements. Larson unqualified opinion was included with the financial statements in a registration statement and prospects for a public offering of securities made by the client. Larson knew that its opinion and financial statements would be used for this purpose. In a suit by a purchaser against Larson, Larson's best defense would be A. Audit was conducted in accordance with GAAS B. Client was aware of the misstatements C. Purchaser was not in privity of contract with Larson D. Identity of the purchaser was not known to Larson at the time of the audit

A. Audit was conducted in accordance with GAAS

An audit failure occurs when A. Auditors fail to conduct the examination... B. Auditors can't collect audit fees owed to them by the client C. A client goes bankrupt D. Auditors are sued by a third party

A. Auditors fail to conduct the examination...

When brining suit against auditors under section 10(b) of the securities exchange of 1934 plaintiffs must allege and prove A. Auditors were aware of material misstatements B. Auditors were guilt of ordinary negligence C. The financial statements in the offering registration contained material misstatements D. The plaintiffs purchased the specific securities

A. Auditors were aware of material misstatements

Beckler & Associates, CPAs, audits the financial statements and prepares the tax returns of Queen Co. The financial statements contained material misstatements, but an unmodified opinion was expressed. Furthermore, the CPA preparer made no inquiries about material return information regarding deductions that was inaccurate and incomplete on its face. Queen provided the tax returns and audited financial statements to Mac Bank in connection with a loan made by Mac to Queen. Beckler knew the documents would be provided to Mac. Queen defaulted on the loan. Mac sued Beckler to recover for its losses associated with Queen's default. Under the common law, which of the following must Mac prove to recover? I. Beckler was negligent in conducting the audit and preparing the tax returns. II. Mac relied on the financial statements and tax returns. A. Both I and II B. Neither I or II C. I only D. II only

A. Both I and II

_____ is the offering of something of value in order to gain an illicit advantage. A. Bribery B. Gift exchange C. Collusion D. Hacking E. A conflict of interest

A. Bribery

A high concern for people by minimal concern for performance can be best described the __ culture A. Caring B. Apathetic C. Exacting D. Shareholder E. Employee

A. Caring

___ law defines the rights and duties of individuals and organizations A. Civil B. Criminal C. Competitive D. Admin E. Regulatory

A. Civil

An auditor selected items for test counts from the client's warehouse during the physical inventory observation. The auditor then traced these test counts into the detailed inventory listing that ultimately agreed to the financial statements. This procedure most likely provided evidence concerning management's assertion of A. Completeness B. Existence C. Rights and obligations D. Valuation E. Presentation and disclosure

A. Completeness

By prohibiting accounting firms from providing both auditing and consulting services to the same corporate clients without permission, the Sarbanes-Oxley Act is attempting to eliminate A. Conflicts of interest B. Cronyism C. Reporting transparency D. Corporate espionage E. Dual reporting

A. Conflicts of interest

Koholberg's six stages of cognitive moral development can be reduced to three levels of ethical concern. Persons at the second level A. Define right as that which confirms to the expectations of good behavior of the larger society B. Are concerned with their immediate interests with external rewards and punishments C. Are concerned with their immediate interests with internal rewards and punishments D. See beyond the norms, laws, and authority of groups or individuals E. Are unethical

A. Define right as that which confirms to the expectations of good behavior of the larger society

Under the Securities Act of 1933, which of the following defenses is related to auditors performing a reasonable investigation of the financial statements A. Due diligence B. Causation C. Contributory negligence D. Prudent auditor

A. Due diligence

Elliot Corp. is interested in purchasing Roger Corp. Prior to the purchase Elliot hired Adam & Co. to audit the financial statements of Roger. During the audit, Adam & Co. failed to discover a fraud that resulted in material misstatements in Roger's financial statements. After the acquisition, the fraud was discovered and Elliot Corp. suffered substantial losses. If Elliot sues Adam & Co., Elliot must prove that Adam & Co: A. Failed to exercise the appropriate level of professional care B. Demonstrated gross negligence C. Knew of the instances of fraud D. Acted recklessly or with lack of reasonable grounds

A. Failed to exercise the appropriate level of professional care

The General Standards Rule requires a member to comply with standards and interpretations. Which of the following is not a standard covered by this A. Independence B. Due professional care C. Planning and supervision D. Sufficient relevant data

A. Independence

The probability that the information circulated by a company will be false for misleading is referred to as A. Information risk B. Business risk C. Assurance risk D. Audit risk

A. Information risk

Which of the following is not a reason why the institutionalization of business ethics has progressed in recent decades? A. Institutionalization of ethics is now mandated for all organizations by governments around the world B. Stakeholders have recognized the ned for improving business ethics C. The government has stepped in when scandals and misconduct have damaged key constituents of businesses D. Gatekeepers have been questioned as to their contributions to major scandals E. Highly ethical companies tend to be more profitable than those suffering misconduct issues

A. Institutionalization of ethics is now mandated for all organizations by governments around the world

____ is/are important in establishing a foundation for normative values A. Institutions B. Corporate conduct C. Opportunity D. Descriptive approaches E. Codes of ethics

A. Institutions

The relationship between business ethics and age A. Is complex, although experience helps older employees make ethical decisions B. Shows a negative correlation C. Suggests that employees with less experience have a greater ability to deal with complex industry-specific ethical issues D. Does not demonstrate a statistically significant correlation E. Is simple, and greater experience leads to better ethical decision making

A. Is complex, although experience helps older employees make ethical decisions

Lauren hires Humphrey, a CPA, to audit her financial statements. The engagement letter includes a statement acknowledging that audited financial statements will be provided to Key Largo Bank for a loan. Humphrey completes the audit and issues an unqualified opinion. Based on the audited financial statements. Bank approves the loan then Lauren files for bankruptcy. Bank who most likely sue Humphrey claiming A. It was a primary beneficiary B. It was a foreseen party C. It was in privity of the contract D. It was a foreseeable party

A. It was a primary beneficiary

Which is not one of the four sources of criminal and civil law? A. Judicial B. Common C. Constitutional D. Admin E. Statutory

A. Judicial

Julie and Lisa are sisters. Julie is a CPA auditing the company where Lisa works. Julie's independence is impaired if A. Lisa is the controller B. Lisa owns 25% of the company C. Independence is impaired in all of the situations listed D. Lisa is the marketing manager

A. Lisa is the controller

The study of business operations for the purpose of making recommendations about the efficient use of resources, effective achievement of business objectives, and compliance with company policies is referred to as A. Operational auditing B. Compliance auditing C. Financial auditing D. Environmental auditing

A. Operational auditing

Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of A. Professional skepticism B. Independent integrity C. Impartial conservatism D. Objective judgement

A. Professional skepticism

Title VII of the Civil Rights Act of 1964 A. Prohibits discrimination on the basis of race, color, sex, religion, or national origin B. Penalizes the top executives in an organization for misconduct C. Is basically the same as the SOX act D. Discourages whistle-blowers from reporting misconduct E. Prohibits pay discrimination in the basis of gender

A. Prohibits discrimination on the basis of race, color, sex, religion, or national origin

Which of the following is not included in the integrity and objective rule? A. Prudent assessment of facts B. Not knowingly misrepresenting facts C. Not subordinate judgement to others D. Free of conflict of interests

A. Prudent assessment of facts

The securities act of 1933 A. Regulates the initial issuance of securities B. Approves and guarantees investments C. Regulates trading in securities D. Regulates the accounting profession

A. Regulates the initial issuance of securities

An individual who believes that an action is ethical because others within his or her company and industry regularly engages in the activity is probably a A. Relativist B. Deontologist C. Utilitarian D. Egoist E. Teleologist

A. Relativist

An ethical issue is a problem, situation, or opportunity A. Requiring an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical B. That harms the environment C. That has no correct answer D. Requiring society as a whole to choose among several actions that must be evaluated as right or wrong

A. Requiring an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical

The auditor's judgement concerning the overall fairness of the presentation of financial position, results of operations, and cash flows is applied within the framework of A. The applicable financial reporting framework (GAAP) B. The auditor's evaluation of the audited company's internal control C. GAAS, which include the concept of materiality D. Quality control

A. The applicable financial reporting framework (GAAP)

Based on SOX, who is ultimately responsible for Independence of external auditor? A. The audit committee B. The CPA firm's quality control partner C. The client's senior management D. The CPA firm's engagement partner

A. The audit committee

Ethical issues is business typically arise because of conflicts among individuals' morals and A. The core values and culture of the organizations where they work B. Values and attitudes of their parents and religion C. Values and attitudes of the society in which they live D. Laws and regulations of the country in which they live E. The type of organization in which they work

A. The core values and culture of the organizations where they work

Accountants must abide by a strict code of ethics that defines their responsibilities to A. Their clients and the public interest B. Their investors and shareholders C. The public only D. Government regulators E. Their client's only

A. Their clients and the public interest

Why is the public more tolerant of consumer misconduct than business misconduct? A. There are big differences is wealth and success between businesses and consumers B. There is a large income disparity among professional businesspeople C. More organizations commit misconduct than individual consumers D. Businesses are expected to have better idea of right and wrong E. The decisions of individuals have little to do with ethics in the business world

A. There are big differences is wealth and success between businesses and consumers

All of the following are true regarding institutions except A. There is no clear link between institutional theory and the stakeholder orientation of management B. The regulatory system aligns with political institutions C. Competition related to economic institutions D. Personal values and norms derive from social institutions E. Stakeholders closely align with institutions

A. There is no clear link between institutional theory and the stakeholder orientation of management

The elements of _____ important to business transactions have been defined as trust, self-control, empathy, fairness, and truthfulness. A. Virtue B. Utilitarianism C. Deontology D. Moral philosophy E. Egosim

A. Virtue

___ are used to subdivide duties within fictional areas of a company A. Work groups B. Individuals C. Experts D. Consultants E. Committees

A. Work groups

In auditing the long-term debt account, an auditor's procedures most likely would focus primarily on management's assertion of: A) existence. B) completeness. C) allocation. D) rights and obligations.

B) completeness.

Kerry CPA is the auditor for Sammy Corp. During the audit, Kerry discovers a material misstatement in Sammy's financial statements. Sammy's management tells Kerry that if the misstatement is corrected or if Kerry issues an opinion that indicates there is a material misstatement, Sammy Corp. will likely have to declare bankruptcy and thousands of employees will lose their jobs. Which of the following statements is true if the misstatement is not corrected and Kerry issues an unqualified opinion on Sammy's financial statements? A. Kerry is liable only to third parties in privity of contract B. Kerry is likely liable to any person who suffered a loss as a result of the fraud C. Kerry is likely liable to third parties even if the third parties were aware of the fraud and did not rely on the opinion D. Kerry is liable only to known users of the financial statements

B. Kerry is likely liable to any person who suffered a loss as a result of the fraud

What happens when society deems a particular business action as wrong or unethical A. The company goes bankrupt B. Legislation usually follows C. The guilty individual is jailed D. Self-regulation is deemed a failure E. Fines automatically follows

B. Legislation usually follows

According to Kohlber's model, as a person progresses through the stages of moral development, and with time, education, and experience, he/she A. Will likely be prompted B. May change his/her cognitive moral development and behavior C. Is unlikely to change his/her values and ethical behaviors D. Will depend more on the input of significant others in ethical decision making E. Will experience less opportunity to behave unethically

B. May change his/her cognitive moral development and behavior

Which of the following is true according to government independence standards A. Non-audit services are allowed if they have been approved by the executive body of the governing organization B. Non-Audit services are allowed providing the audit organization does not perform management functions, make management decisions, or audit its own work C. Non-audit services are allowed as long as the nature of the service is publicly disclosed including a statement that independence has not been compromised D. Non-audit services can't be provided to a government entity that is an attest client

B. Non-Audit services are allowed providing the audit organization does not perform management functions, make management decisions, or audit its own work

Which of the following is true regarding abusive and intimidating behavior A. Enduring abusive behavior is necessary to get ahead B. Not everyone agrees on what constitutes abusive behavior C. An organization can't grow if the manager is intimidating D. Abusive behavior like bullying is illegal in the workplace E. Most abusive or intimidating behavior consitutes sexual harassment

B. Not everyone agrees on what constitutes abusive behavior

External and Internal rewards relate to which part of the ethical decision making framework A. Obedience to authority B. Opportunity C. Cognitive moral development D. Individual factors E. Significant others

B. Opportunity

When testing the completeness assertion for a liability account, an auditor ordinarily works from the A. Financial statements to the potentially unrecorded items B. Potentially unrecorded items to the financial statements C. Trial balance to the subsidiary ledger D. Accounting records to the supporting evidence

B. Potentially unrecorded items to the financial statements

An interchange of giving and receiving in social relationships is known as A. Justice B. Reciprocity C. Honesty D. Integrity E. Optimization

B. Reciprocity

The ability to influence the behavior of others by offering them something desirable is best described as A. Coercive power B. Reward power C. Expert power D. Legitimate power E. Referent power

B. Reward power

According to the profession's ethical standards, an auditor would be considered independent in which of the following instances? A. The client owes the auditor fees for more than two years prior to the issuance of the audit report B. The auditor's checking account that is fully insured by the federal agency is held at a client's financial institution C. The auditor is the officially appointed stock transfer agent of a client D. The client is the only tenant in a commercial building owned by the auditor

B. The auditor's checking account that is fully insured by the federal agency is held at a client's financial institution

Which of the following statements about corporate culture is false A. Corporate culture refers to the patterns and rules that govern the behavior of an organization and its employees, particularly the shared values, beliefs, and customs B. The values and ethical beliefs that actually guide the firm's employees tend not to be the same ones that management states as defining the firm's culture C. Corporate culture includes the behavioral patterns, concepts, values, ceremonies, and rituals that take place in an organization D. The culture of an organization may be explicitly stated or unspoken E. Failure to monitor or manage an organization's culture may foster unethical behavior

B. The values and ethical beliefs that actually guide the firm's employees tend not to be the same ones that management states as defining the firm's culture

Which of the following statements concerning the Ultramares corp V Touche is not true A. This case was brought under common law B. This case provided a test determined whether a third party qualified as a primary beneficiary C. This case concluded that auditor's liability to third parties would not be limited to gross negligence D. Established the rights of third parties to bring suits against auditors under common law

B. This case provided a test determined whether a third party qualified as a primary beneficiary

Foreseeable third parties are best described as A. Those third parties who will rely on the audit and are specifically known by auditors B. Those parties whose decisions normally rely on audited financial statements and opinions on those financial statements C. Those third parties who have a direct relationship with auditors through previous contract related to the audit engagement D. Management of the entity

B. Those parties whose decisions normally rely on audited financial statements and opinions on those financial statements

The audit objective that footnotes in the financial statements should be clear and expressed such that the information is easily conveyed to the readers of the financial statements is related most closely with which of the ASB presentation and disclosure assertion A. Occurrence B. Understandability C. Comprehensibility D. Rights and obligations

B. Understandability

Donation of computer equipment to schools by Toshiba would be associated with _____ responsibilities. A. Economic B. Voluntary C. Legal D. Ethical E. Minimum

B. Voluntary

Which of the following is an underlying condition that in part creates the demand by users for reliable information A. Decisions that are time-sensitive B. Economic transactions that are numerous and complex C. All of these D. Financial decisions that are important to investors and users E. Users separated from accounting records by distance and time

C. All of these

Which of the following is required for a CPA firm to designate itself as "members of the american institute of certified public accountants" on its letterhead A. The owners whose names appear in the firm name must be members B. The firm must be a dues-paying member C. All owners must be members D. At least one of the owners must be a member

C. All owners must be members

Corporate Social Responsibility is A. Charitable contributions made by a business to enhance its reputation with stakeholders B. The institutionalization of business ethics into all levels of business decision making C. An organization's obligation to maximize its positive effects and minimize its negative effects on stakeholders D. Principles, values, norms, that primarily guide individual and group behavior in the world of business E. A business's responsibility to manufacture products that function properly

C. An organization's obligation to maximize its positive effects and minimize its negative effects on stakeholders

An attestation engagement is one in which a CPA is engaged to A. Testify as an expert witness in accounting, auditing or tax matters, given certain stipulated facts B. Issue, or does issue, a report on subject matter, or an assertion about the subject matter that is the responsibility of another party C. Assemble prospective financial statements based on the assumptions of the entity's management without expressing any assurance D. Provide tax advice or prepare return based on financial information the CPA has not audited or reviewed

C. Assemble prospective financial statements based on the assumptions of the entity's management without expressing any assurance

The risk an entity will fail to meet its objectives is referred to as A. Assurance risk B. Information risk C. Business risk D. Audit risk

C. Business risk

When concerning centralized and decentralized structures, which one tend to be more ethical A. Decentralized because of the clear rules that dictate appropriate behavior in business B. Centralized because it is easier to uproot unethical decisions C. Centralized because of the strict formalization and implementation of ethics policies and procedures D. Decentralized because they give employees more decision making authority E. Both types of organizational structure are equally ethical

C. Centralized because of the strict formalization and implementation of ethics policies and procedures

When considering centralized and decentralized structures, which one tends to be more ethical A. Decentralized because of the clear rules that dictate appropriate behavior in business B. Centralized because it is easier to uproot unethical activities C. Centralized because of the strict formalization and implementation of ethics policies and procedures D. Decentralized because they give employees more decision making authority E. Both types of organizational structure are equally ethical

C. Centralized because of the strict formalization and implementation of ethics policies and procedures

The audit objective that all balances include all items that should be recorded in that account is related most closely to which one of the ASB balance assertions A. Valuation B. Rights and obligations C. Completeness D. Existence

C. Completeness

The audit objective that all transactions and accounts that should be presented in the financial statements are in fact included is related to which of the PCAOB assertions A. Valuation B. Rights and obligations C. Completeness D. Existence

C. Completeness

The ___ was established after the latest financial crisis, in response to a situation that caused many consumers to lose their homes A. Environmental Protection Agency B. World Bank C. Consumer Financial Protection Bureau D. World Trade Organization E. SOX

C. Consumer Financial Protection Bureau

Which of the following is not a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act? A. Increases the accountability and transparency of financial institutions B. Creates a bureau to educate consumers in financial literacy C. Creates an organization to pay the bills of low-income consumers D. Creates incentives for whistle-blowers to come forward E. Increases oversight of the financial industry

C. Creates an organization to pay the bills of low-income consumers

Most organizations with strong ethical climates usually focus on the core value of placing ___ interest first A. Stockholders' B. Employees' C. Customers' D. Distributors' E. Suppliers'

C. Customers'

The ___ was called "a sweeping overhaul of the financial regulatory system.. on a scale not seen since the reforms that followed the Great Depression" A. Equal Pay act B. ADA C. Dodd-Frank Wall Street Reform and Consumer Protection act D. Age discrimination in employment act E. Title VII of the Civil Rights act

C. Dodd-Frank Wall Street Reform and Consumer Protection act

Auditors should not be liable to any party if they perform services that met the standards of A. Ordinary negligence B. Good faith C. Due care D. Regulatory providence

C. Due care

A major purpose of the Federal Sentencing Guidelines for Organizations, the SOX act, and the Dodd-Frank act is to A. Guard against anti-competitive behaviors B. Create strategy among businesses to improve the economy C. Encourage employees to report misconduct D. Discourage businesses from taking risks E. Mandate that companies engage in self-regulations

C. Encourage employees to report misconduct

What type of evidence would provide the highest level of assurance in an attestation engagement A. Evidence obtained from multiple internal inquires B. Evidence secured solely from within the entity C. Evidence obtained from independent sources D. Evidence obtained indirectly

C. Evidence obtained from independent sources

In performing an attestation engagement, a CPA typically A. Supplies litigation support services B. Assesses control risk at a low level C. Expresses a conclusion on an assertion about some type of subject matter D. Provides management consulting advice

C. Expresses a conclusion on an assertion about some type of subject matter

__ are used to obtain or retain business and are not generally considered illegal in the US A. Threats B. Bribes C. Facilitation payments D. Coercive techniques E. Gifts

C. Facilitation payments

Why might an individual's moral philosophies differ when making personal decision versus a work-related decision A. Individual's tend to act more unethically in large work groups than alone B. Businesses train individuals to adopt different moral philosophies of work C. Goals and pressures in the workplace are different from those outside of work D. Ethics is not held to be a high concern among managers in the workplace E. Personal temptations are rarely a problem in the business environment

C. Goals and pressures in the workplace are different from those outside of work

Which of the following cultures combines high levels of concern for people and performance A. Apathetic culture B. Caring culture C. Integrative culture D. Exacting culture E. Cooperative culture

C. Integrative culture

Research concerning nationality and the ability to make ethical decisions A. Suggest that corporations pay a lot of attention to such research B. Suggests that organizations should be very concerned about employee's nationality C. Is hard to interpret in a business context because of cultural differences D. Shows no relationship between the two E. Suggests that. the influence of nationality on corporate culture is growing

C. Is hard to interpret in a business context because of cultural differences

The establishment of an ethics committee within an organization A. Has an informal organizational structure B. Is usually organized around general business topics C. Might raise ethical concerns or resolve ethical dilemma D. Occurs when formal work groups do not work E. Usually increases ethical tension

C. Might raise ethical concerns or resolve ethical dilemma

________ includes shared values, beliefs, norms, and artifacts that influence employees and determine behavior A. Corporate compliance B. Promotions, programs, management C. Organizational culture D. Ethical culture E. Apathetic culture

C. Organizational culture

Multiple elements work on individuals to affect their behavior. While an individual may intend to do the right thing _____ can alter this intent A. Religious beliefs B. Familial expectations C. Organizational or social forces D. The desire for financial gain E. Cognitive dissonance

C. Organizational or social forces

Which of the following is not included in the American Accounting Association definition of auditing A. Established criteria B. Systematic process C. Potential conflict of interest D. Assertions about economic action

C. Potential conflict of interest

Specific and pervasive boundaries for behavior that should not be violated are known as ___ A. Values B. Business ethics C. Principles D. Philosophy E. Morals

C. Principles

When a person defines right and wrong on the basis of legal contracts, he or she is using which of Kohlberg's stages of development A. Mutual interpersonal expectations, relationships, and conformity B. Universal ethical principles C. Prior rights, social contract, utility stage D. Social system and conscience maintenance E. Punishment and obedience

C. Prior rights, social contract, utility stage

How does the Securities Act of 1933 which imposes civil liability on auditors for misrepresentations or omissions of material facts in a registration statement, expand auditors' liability to purchase of securities beyond that of common law A. Purchasers have to promote either fraud or gross negligence as a basis for recovery B. Auditors are held to a standard of care described as professional skepticism C. Privity with purchasers is not necessary element of proof D. Purchasers only have to prove loss caused by reliance on audited financial statements

C. Privity with purchasers is not necessary element of proof

When a restaurant claims that it sells the world's best cup of coffee, it could be accused of A. False labeling B. Deceptive advertising C. Puffery D. Concealed facts E. Implied falsity

C. Puffery

The ___ desires to find a solution to a social problem rather than to simply earn profits A. CEO B. Ethics officer C. Social Entrepreneur D. Cause-related marketer E. Consumer Financial Protection Bureau

C. Social Entrepreneur

The process of a CPA obtaining a certificate and license in a state other than the state which the CPA's certificate was originally obtained is referred to as A. Quid pro quo B. Re-examination C. Substantial equivalency D. Relicensing

C. Substantial equivalency

Which of the following best describes the main reason independent auditors report on management's financial statements A. Management fraud may exist and it is likely to be directed by independent auditors B. Misstated account balances may be corrected as the result of the independent audit work C. The management that prepares the statements and the persons who use the statements may have conflicting interests D. The management that prepares the statements may have a poorly designed system of internal control

C. The management that prepares the statements and the persons who use the statements may have conflicting interests

Business ethics, as a field, has passed through which of the following states A. A field of study to recognition of social issues to theological discussion B. Recognition of social issues to theological discussion to a field of study C. Theological discussion to recognition of social issues to a field of study D. Recognition of social issues to a field of study to theological discussion E. A field of study to theological discussion to recognition of social issues

C. Theological discussion to recognition of social issues to a field of study

A person who offers a facilitation payment in order to secure a contract that will keep her company from going bankrupt and laying off hundreds of employees may be an ____ because she is trying to secure the greatest good for the greatest number of people A. Relativist B. Deontologist C. Utilitarian D. Egoist E. Humanitarian

C. Utilitarian

Dodd-Frank Wall Street Reform and Consumer Protection Act A. Represented modest reform to the finance industry B. Made it mandatory for public corporations to hire ethics officers C. Was designed to make the financial services industry more responsible D. Was very popular among Wall Street bankers E. Came out of theological discussions in the 1920s

C. Was designed to make the financial services industry more responsible

According to SOX accountants performing an audit or review must maintain all engagement documentation for a period of A. 5 years B. 2 years C. 3 years D. 7 years

D. 7 years

More than a compliance program, business ethics is becoming A. An initiative led by nonprofit organizations B. A guaranteed way to earn higher financial returns C. A program that decreases profits but increases societal benefits D. A management issue to achieve competitive advantage E. Mainly a government regulatory issue

D. A management issue to achieve competitive advantage

Which of the following would not need to be demonstrated by third parties brining suit against auditors for losses sustained under the Securities Act o 1933 A. Purchasers would need to demonstrate all of these B. The client's financial statements contained a material misstatement C. Third-party purchasers suffer a loss D. Auditors were aware of the materially misstated financial statements

D. Auditors were aware of the materially misstated financial statements

The Foreign corrupt Practices act outlawed A. Executive misconduct B. Corruption in foreign governments C. Global accounting fraud D. Bribery of officials in other countries E. Price collusion

D. Bribery of officials in other countries

The engineering department at Omni Company built a piece of equipment in the company's own shop for use in the company's operations. The auditor reviewed al work orders that were capitalized as part of the equipment costs. Which of the following in the ASB transaction assertion most closely related to the auditor's testing? A. Completness B. Accuracy C. Occurrence D. Classification

D. Classification

The ___ leader demands instantaneous obedience and focuses on punishing wrong behavior, achievement, initiative, and self control A. Democratic B. Coaching C. Affiliative D. Coercive E. Pacesetting

D. Coercive

Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about the PCAOB assertion of A. Rights B. Presentation C. Existence D. Completeness

D. Completeness

When developing an ethical culture, there has to be an ___ element because every organization has employees that will try to take advantage if there is an opportunity for misconduct A. Values-based B. Statement of mission C. Ethical D. Compliance E. Punitive

D. Compliance

The ___ states that economic and social equalities should be arranged to provide the most benefit to the least-advantaged members of society A. Justice principle B. Constitutional principle C. Liberty principle D. Difference principle E. Equality principle

D. Difference principle

__ justice considers the processes and activities that produce the outcome or results A. Communications B. Evaluation C. Procedural D. Disruptive E. Interactional

D. Disruptive

The four basic requirements for becoming a CPA in most states are A. The CPA exam, experience, continuing professional education, and a state certification B. Education, the CPA exam, experience, and substantial equivalency C. Continuing professional education, the CPA exam, experience, and an AICPA certificate D. Education, the CPA exam, experience, and a state certificate

D. Education, the CPA exam, experience, and a state certificate

This philosophy defines right or acceptable actions as those that maximize a particular person's self-interest as defined by individual A. Teleology B. Utilitarianism C. Deontology D. Egoism E. Relativism

D. Egoism

Values are A. A person's moral philosophy about what is right or wrong B. Acceptable behavior as defined by the company and industry C. Attempts by businesses to minimize their negative impact on society D. Enduring beliefs and ideals that are socially enforces E. Specific and pervasive boundaries for behavior that should not be violated

D. Enduring beliefs and ideals that are socially enforces

Companies that __ will most likely be found in violation of pro-competitive legislation A. Pollute waterways B. Knowingly harm consumers C. Contract with sweatshops D. Establish monopolies E. Help consumers

D. Establish monopolies

The confirmation of an account payable balance selected from the general ledger provides primary evidence regarding which management assertion? A. Completeness B. Valuation C. Allocation D. Existence

D. Existence

Marcus is the best performing development director his non-profit organization has ever had. He possesses countless tricks and tips to continue to bring in donations, positive publicity, and supporters. Marcus would likely have _____ over new development department staff. A. Coercive power B. Group power C. Referent power D. Expert power E. Democratic power

D. Expert power

Which of the following would not be considered a negative reinforcement of employee behavior A. Pay penalties B. Demotions C. Firings D. Ignoring the behavior E. Repirmands

D. Ignoring the behavior

What is the term used to identify the risk that the client's financial statements may be materially false and misleading A. Risk assessment B. Business risk C. Client risk D. Information risk

D. Information risk

What concept refers to a person's personal philosophy about what is right or wrong A. Principles B. Philosophy C. Values D. Morals E. Integrity

D. Morals

Which of the following types of audit evidence provides the least assurance of reliability A. Prior months bank statements obtained from the client B. Receivable confirmations received from the client's customers C. Pre-numbered receiving reports completed by the client's employees D. Municipal property tax bills prepared in the client's name

D. Municipal property tax bills prepared in the client's name

According to the ethical decision-making framework, the absence of punishment provides an ____ for unethical behavior A. Individual factor B. Reason C. Ethical issue intensity D. Opportunity E. Significant other

D. Opportunity

___ are satisfied by social and interpersonal relationships, and ___ are satisfied by creative or productive activities A. Growth needs; relatedness needs B. Personal needs; group needs C. Coercive needs; ethical needs D. Relatedness needs; growth needs E. Group needs; personal needs

D. Relatedness needs; growth needs

Which of the following is not one of the AICPA principles of professional conduct A. Responsibilities B. Objectivity C. Due care D. Reliability

D. Reliability

The ___ was/were enacted to restore confidence in financial reporting and business ethics after the accounting scandals of the early 2000s A. Foreign Corrupt Practices Act B. Federal Sentencing Guidelines for Organizations C. Dodd-Frank Wall Street Reform and Consumer Protection act D. SOX E. Defense Industry Initiative on Business Ethics and Conduct

D. SOX

Paula performed the audit of the financial statements of Abdul. Abdul is currently considering several alternatives for raising capital, including seeking financing from area banks for an initial public offering. Which of the following third parties would have the lowest likelihood of successfully brining suit for ordinary negligence against Paula A. Purchases of Abdul securities in an initial public offering B. Abdul company C. First state bank D. Simon Whitaker, a private investigator

D. Simon Whitaker, a private investigator

Many people wrongly assume that a company will be ethical if it A. Attracts high-profitable investors B. Provides adequate compensation to employees C. Performs highly on the stock market D. Simply hires ethical employees E. Rewards employees for high performance

D. Simply hires ethical employees

_____ is the synergistic and mutually beneficial use of an organization's core competencies and resources to deal with key stakeholders so as to bring about organizational and societal benefits. A. Social responsibility B. Business ethics C. Corporate philanthropy D. Strategic philanthropy E. Cause-related marketing

D. Strategic philanthropy

This philosophy stipulates acts are morally right or acceptable if they produce some desired result, such as realization of self-interest or utility A. The relativist perspective B. Hedonism C. Ethical formalism D. Teleology E. Deontology

D. Teleology

Which of the following groups is not a group that receives special legal protections A. The elderly B. Children C. Senior citizens D. The highly educated E. Young consumers

D. The highly educated

Which of the following statements about the securities act of 1933 is not true A. Any purchaser of securities may due auditors B. The plaintiff must prove damages or an economic loss C. The plaintiff need not prove that the material misstated financial statements are the direct cause of the loss D. The plaintiff must prove they read and relied upon the financial statements

D. The plaintiff must prove they read and relied upon the financial statements

___ is essential in building long-term relationships between businesses and consumers A. Profit B. A code of ethics C. Governance D. Trust E. Knowledge

D. Trust

While he is normally against the idea of harming animals, Eric views animal research in the pharmaceutical industry as a way to improve drugs that will benefit mankind. Which moral philosophy most closely represents his viewpoint? A. Individualism B. Relativism C. Humanitarianism D. Utilitarianism E. Egoism

D. Utilitarianism

How do violations of the law usually start? A. When businesspeople blatantly engage in misconduct B. When organizational stakeholders are not prioritized C. When the organization lacks an code of ethics D. When businesspeople stretch the limits of ethical standards E. When organizations engage in activities that are clearly illegal

D. When businesspeople stretch the limits of ethical standards

Which of the following would be inappropriate for an auditor to ask a client when exhibiting an appropriate level of professional skepticism while completing an audit procedure related to the internal control system A. What can go wrong in this process B. What happens when a key employee goes on vacation C. What else is important to know about this position D. Which of your employees is a fraudster

D. Which of your employees is a fraudster

Under the anti-fraud provisions of Section 10(b) of the Securities Exchange Act of 1934, auditors may be liable if they acted A. With independence B. Without due diligence C. With ordinary negligence D. Without good faith

D. Without good faith

In order to be considered as external auditors with respect to government agencies, GAO auditors must be A. Guided by standards similar to GAAS B. Empowered as the accounting and auditing agency by Congress C. Funded by the federal government D. organizationally independent

D. organizationally independent

Ethical culture is defined as A. The establishment and enforcement of ethical codes throughout the organization B. The codification of laws to reward organizations for taking action to prevent misconduct C. Rules, standards, and moral principles regarding what is right or wrong in specific situations D. The development of rules and norms that are socially enforced E. Acceptable behavior as defined by the company and industry

E. Acceptable behavior as defined by the company and industry

The term that comprises organizational principles, values, and norms that may originate from individuals, organizational statements, or from the legal system that primarily guide individual and group behavior in business is defined as _____. A. Principles B. Integrity management C. Stakeholder orientation D. Values E. Business ethics

E. Business ethics

Opportunity A. Relates directly to the power of the industry rivals' suppliers over other rivals B. Relates to being lucky in preventing misconduct C. Directly relates to barriers to individual ethics D. Results from motivational "carrots and sticks" superiors use to influence employee behavior E. Can be eliminated in a corporation

E. Can be eliminated in a corporation

The Federal Sentencing Guidelines for Organizations set the tone for organizational ethics compliance program by A. Providing detailed guidelines for how to set up organizational ethics programs to guard against unethical conduct B. Forcing all organizations to develop mandatory reporting systems and ethics programs C. Providing a thorough examination of company codes of ethics to determine whether they are sufficient D. Eliminating most of the federal legislation that created inefficient and time-consuming activities for businesses E. Codifying into law incentives for organizations to take action such as developing ethical compliance programs to prevent misconduct

E. Codifying into law incentives for organizations to take action such as developing ethical compliance programs to prevent misconduct

The primary objective of the US antitrust laws is to A. Protect consumers from high prices and foreign products B. Protect domestic businesses C. Protect employees D. Promote strategies that enhance welfare over consumer welfare E. Distinguish competitive strategies that enhance consumer welfare from those that reduce it

E. Distinguish competitive strategies that enhance consumer welfare from those that reduce it

Which of the following laws instituted a whistle-blower bounty program in which whistle-blowers are eligible to receive 10-30% of fines if their reports in convictions of more than 1 million in penalties? A. Title VII of the Civil Rights Act B. The Sherman Antitrust Act C. The Federal Sentencing Guidelines for Organizations D. SOX E. Dodd-Frank

E. Dodd-Frank

An ethical organizational culture creates an environment in which to structure behavior that is then evaluated by stakeholders. The key elements of an organizational culture include all of the following except A. Values B. Norms C. Artifacts D. Behavior E. Employee compensation

E. Employee compensation

Both individual ethics and organizational ethics have an impact on an employee's A. Productivity B. Personal happiness C. Compensation D. Fitness level E. Ethical intention

E. Ethical intention

Passed by Congress in 1991, the _____ created incentives for organizations to develop and implement ethical compliance programs. A. SOX B. US Sentencing Commission's Guidelines for Ethical Compliance C. Ethical Compliance Act D. Social Responsiveness Compliance Act E. Federal Sentencing Guidelines for Organizations

E. Federal Sentencing Guidelines for Organizations

Normative approach A. Methods for adopting values and norms within an organization B. How organizational decision makers make ethical decisions C. Ways to determine the moral intensity of an ethical issue D. Models that describe an individual's moral philosophies E. How organizational decisions makers should approach an issue

E. How organizational decisions makers should approach an issue

___ is a global compliance management standard that address risks, legal requirements, and stakeholder needs A. Defense Industry Initiative on Business Ethics and Conduct B. UN Global Compact C. Ethical Trading Initiative D. Stakeholder theory E. ISO 19600

E. ISO 19600

The ___ includes the motivational "carrots and sticks" superiors use to influence employee behavior A. Normative approach B. Locus of control C. Descriptive approach D. Obedience to authority E. Immediate job context

E. Immediate job context

Employees who believe they control the events in their lives by their own effort and skill have a(n) A. Opportunity B. Moral intensity C. Obedience to authority D. External locus of control E. Internal locus of control

E. Internal locus of control

An activity is probably ethical if it A. Is approved of by no one in the organization, but has been carried out in the industry before B. Does not make consumers feel cheated, deceived, or manipulated C. Is customary in the industry D. Does not violate any laws E. Is approved of by most individuals in the organization and is customary in the industry

E. Is approved of by most individuals in the organization and is customary in the industry

An individual who emphasizes others rather than himself or herself in making decisions is in which of the following of Kohlberg's stages of development A. Prior rights, social contract, or utility B. Social system and conscience maintenance C. Punishment and obedience D. Universal ethical principles E. Mutual interpersonal expectations, relationships, and conformity

E. Mutual interpersonal expectations, relationships, and conformity

___ believe that no one thing is intrinsically good A. Hedonists B. Teleologists C. Deontologists D. Relativists E. Pluralists

E. Pluralists

Which of the following is not considered a significant other group in the workplace A. Co-workers B. Subordinates C. Peers D. Managers E. Spouses

E. Spouses

A central problem with relativism is A. That it represents unattainable goals B. That few people believe that these principles are important C. That may feel that it only works in theory D. That it is very complicated E. That it emphasizes people's differences not similarities

E. That it emphasizes people's differences not similarities

Moral Philosophy refers to A. The morality of business activities B. The principles or rules that policymakers use to create legislation C. The legality of business activities D. Values developed in an organizational environment E. The principles or rules that people use to decide what is right and wrong

E. The principles or rules that people use to decide what is right and wrong

Which of the following statements is true about business ethics A. A firm that has ethical management will succeed financially B. Codes of ethics should cover every business ethics issue C. Business ethics focuses more on laws over values D. Individuals apply the same ethical rules in businesses as they do at home E. There is no conflict between profits and business ethics

E. There is no conflict between profits and business ethics

T/F Examples of consumer fraud include shoplifting, collusion, guile, and duplicity

True