Ch 3 Legal, Regulatory and Professional Environment
The AICPA has the authority to set standards and make rules in all the following areas EXCEPT: a) Auditing standards (for nonpublic companies). b) Auditing standards (for public companies). c) Code of professional conduct. d) Compilation and review standards.
Auditing standards (for public companies).
Which of the following is not a responsibility of the PCAOB? a) Registering public accounting firms that audit publicly traded companies. b) Inspecting registered public accounting firms. c) Converging GAAP standards with IFRS standards. d) Enforcing compliance with the Sarbanes-Oxley Act.
Converging GAAP standards with IFRS standards.
In September 2004, the Committee of Sponsoring Organizations (COSO) of the Treadway Commission released their _______ framework, recognized by the SEC as the critical methodology for Sarbanes-Oxley. a) ERM b) IFRS c) XBRL d) XML
ERM
The ________ Amendment entitles a person to due process of law and equal protections under the Law. a) Fifth b) Fourth c) Sixth d) Fourteenth
Fourteenth
The ________ Amendment prohibits unreasonable searches and seizures. a) Fifth b) Fourth c) Sixth d) Fourteenth
Fourth
PCAOB Auditing Standard No. 3 (AS3), Audit Documentation, requires that audit engagement documentation should include a list of all EXCEPT: a) significant fraud risk factors. b) the auditor's response. c) the results of the auditor's related procedures. d) List of the internal controls.
List of the internal controls.
Which of the following is not a major provision in the Sarbanes-Oxley Act of 2002? a) Creating an independent regulatory framework for the accounting profession. b) Enhancing the quality and transparency of financial reports. c) Revising the process of establishing new financial accounting standards. d) Establishing new protections for corporate whistleblowers.
Revising the process of establishing new financial accounting standards.
Members of the PCAOB are appointed by the: a) AICPA b) SEC c) FASB d) IASB
SEC
The Miranda warnings consist of everything but the following: a) The interviewee has a right to remain silent. b) The interviewee has a right to an attorney. c) The interviewee's answers may NOT be used against him. d) If the interviewee cannot afford an attorney, one will be provided at no cost.
The interviewee's answers may NOT be used against him.
It is advisable that employers document good cause for any termination in the employee's personnel file. Good cause might include the following EXCEPT: a) The employee's conduct was against written policy. b) The investigation was fair, objective, and evidence suggested the elimination of alternative suspects. c) The punishment fits the crime, meaning that the punishment is reasonable given the nature of the offense. d) The termination was discriminatory, meaning that not all persons committing such an act were or would be terminated.
The termination was discriminatory, meaning that not all persons committing such an act were or would be terminated.
Legal privileges are protections against certain types of testimony. Which of the following is not a legal privilege? a) Attorney-client privilege b) Librarian-patron privilege c) Attorney work-product privilege d) Physician-patient privilege
b) Librarian-patron privilege
Fraud may only be prosecuted criminally. true/false
false
In the criminal justice system, individuals can be named as defendants, but businesses and other organizations may not be prosecuted. true/false
false
Section 404 of SOX recommends, but does not require, the company's external auditors to attest to and issue a report on management's assessment of internal control. true/false
false
As long as a nonpublic entity is conducting the interview, an employee does not have the right to have a lawyer present during the interview. true/false
false because The employee maintains this right if he or she requests one
The First Amendment provides that a person cannot be compelled to provide incriminating information against himself in a criminal case. true/false
false fifth amendment
Subsequent to the passage of the Sarbanes-Oxley Act of 2002, the auditing of public companies became the responsibility of the newly created American Institute of CPAs (AICPA). true/false
false oversight of audit firms auditing public companies after the passage of SOX, became the responsibility of PCAOB
The Twentieth Amendment entitles a person to due process of law and equal protections under the Law. true/false
false the fourteeth amendment does
The normal order of discovery includes the following steps in what sequence? Note. The step sequence is after each item - #.Interrogatories -1 Attorneys take depositions -2 Request to produce documents -3 Requests for admission -4
interrogatories, request to produce documents, attorneys take depositions, requests for admission 1,3,2,4
Which of the following is not a major form of negotiated settlements in a civil trial? a) out-of-court settlements b) majority jury vote c) arbitration d) mediation
majority jury vote
The ______ Amendment provides that an individual has the right to an attorney to defend himself and the right to confront witnesses against him. a) Fifth b) Fourth c) Sixth d) Fourteenth
sixth
Generally, investigators can obtain documentary evidence using all approaches EXCEPT: a) theft. b) voluntary consent. c) subpoena. d) search warrant.
theft
Anyone in a public park, parking lot, or mall may be videotaped without violating any laws as long as no audio of the target is recorded. true/false
true
Because employers do not have the right to place employees in a custodial setting, an employee has limited Fifth Amendment rights. true/false
true
Generally, evidence is admissible in court if it is relevant, its probative value outweighs any prejudicial effects, and it is trustworthy. true/false
true
If the victims or others with a stake in the outcome of a fraud trial are not satisfied with the results of the criminal justice system, they may pursue their claim through the civil justice system. true/false
true
In addition to the criminal and civil justice systems, regulatory agencies also play an important role in monitoring illegal activities and pursuing those responsible. true/false
true
Probable cause is the standard by which law enforcement may make an arrest, conduct a personal or property search, or obtain a warrant. true/false
true
SOX also makes it unlawful for any officer or director of a public company to take any action to fraudulently influence, coerce, manipulate, or mislead an auditor in the performance of an audit of the company's financial statements. true/false
true
The Fourth Amendment prohibits unreasonable searches and seizures. true/false
true
The PCAOB is charged with overseeing public company audits, setting audit standards, and investigating acts of noncompliance by auditors or audit firms. true/fal
true
The Sarbanes-Oxley Act mandates that each member of a company's audit committee must be a member of its board of directors and must otherwise be independent. true/false
true
The Sarbanes-Oxley Act of 2002 was signed into law on July 30, 2002 to address corporate governance and accountability as well as public accounting responsibilities in improving the quality, reliability, integrity, and transparency of financial reports. true/false
true