Criminology & Ethics Questions

About how many law enforcement agencies exist in the United States? A. 20,000 B. 5,000 C. 50,000 D. None of the above

A. 20,000 There are approximately 20,000 law enforcement agencies in the United States. The majority-about 13,600-are municipal police departments. Local jurisdictions also maintain more than 1,000 special police units, including park rangers, harbor police, transit police, and campus security forces. At the county level, there are some 3,000 sheriff's departments. In addition, almost every state maintains either a state police force or a highway patrol unit. Altogether, there are nearly one million persons employed in law enforcement-between 500,000 and 700,000 sworn officers or uniformed personnel and 150,000 civilian employees.

Many sociologists think a company's size contributes to organizational crimes. One of the reasons is that the large company becomes too unwieldy for executives to manage. This concept is called: A. Authority leakage B. Communication degeneration C. Departmental distancing D. Organizational distancing

A. Authority leakage Vaughan writes that organizational growth naturally leads to a progressive loss of control over departments. Executives cannot hope to keep track of all the units of a large company, and must rely on subordinates to carry out policy. Vaughn states that when the distance between top executives and subordinate units grows to a sufficient level, "authority leakage" results. Such leakage allows subsidiaries, company researchers, accountants or other departments to engage in misconduct since there are inadequate internal controls to check the behavior.

Edward Gross and other criminologists have asserted that organizations are inherently: A. Criminogenic B. Exploitative C. Criminal D. None of the above

A. Criminogenic Edward Gross has asserted that all organizations are inherently "criminogenic" (prone to committing crime), but not necessarily criminal. Without necessarily meaning to, organizations can invite fraud as a means of obtaining goals. Gross makes this assertion because of the reliance on the "bottom line."

In the area of criminal justice, ______________ specify the sentence for a criminal for a fixed number of years, usually set by the legislature, to be served upon conviction of a certain offense. A. Determinate sentences B. Split sentences C. Indeterminate sentences D. None of the above

A. Determinate sentences A determinate sentence is one of a fixed number of years, usually set by the legislature, to be served upon conviction of a certain offense. In so-called "flat" determinate sentences, the offender must serve the entire time in prison, say five years for a fraud violation. More often (though decreasingly so in many jurisdictions) the flat sentence can be reduced, usually by as much as one-third, for "good behavior." This carrot is considered important by some prison administrators because it offers a reward for conforming to institutional rules beyond the avoidance of punishments meted out within the walls, such as solitary confinement.

One researcher found that embezzlers were likely to have three factors accounting for their crimes: immediate financial need, perceived opportunity, and rationalization. The person responsible for this theory of embezzlement is: A. Donald R. Cressey B. William R.R. Parnell C. Edwin H. Sutherland D. None of the above

A. Donald R. Cressey Over the years, Cressey's hypothesis has become more well known as the "fraud triangle." One leg of the triangle represents a perceived unsharable financial need. The second leg is for perceived opportunity, and the final is for rationalization. The role of the nonsharable problem is important. Cressey said, "When the trust violators were asked to explain why they refrained from violation of other positions of trust they might have held at previous times, or why they had not violated the subject position at an earlier time, those who had an opinion expressed the equivalent of one or more of the following quotations: (a) 'There was no need for it like there was this time.' (b) 'The idea never entered my head.' (c) 'I thought it was dishonest then, but this time it did not seem dishonest at first.'"

The term "white-collar crime" was first coined by _________________ in December 1939 during an address to the American Sociological Society. A. Edwin H. Sutherland B. Donald R. Cressey C. Immanuel Kant D. None of the above

A. Edwin H. Sutherland Since the term first was used there have been constant disputes regarding what is (or should be) the definition of white-collar crime. The designation was coined by Edwin H. Sutherland in December l939 during his presidential address in Philadelphia to the American Sociological Society.

The ____________________ principle asks, "What would happen if everyone acted in that certain way?" A. Generalization B. Utilitarian C. Imperative D. None of the above

A. Generalization The generalization principle, developed by modern-day philosopher Marcus G. Singer, argues that: "If all relevantly similar persons acting under relevantly similar circumstances were to act a certain way and the consequences would be undesirable, then no one ought to act in that way without a reason." Stated succinctly, "What would happen if everyone acted in that certain way?"

The foremost advocate of the imperative school of ethics was: A. Immanuel Kant B. William R.R. Parnell C. John Stuart Mill D. Marcus Singer

A. Immanuel Kant The philosopher Immanuel Kant (1724-1804) was perhaps the foremost advocate of the imperative school. Kant was unwilling to rely solely upon decision-makers' inclinations and values for decisions in various circumstances. He strongly preferred rules without exceptions.

According to this theory, people obey the law because they fear punishment: A. Instrumental Perspective B. Normative Perspective C. Legitimacy D. Voluntary Compliance

A. Instrumental Perspective According to the theory of Instrumental Perspective, people obey the law because they fear punishment.

Under the Corporate Sentencing Guidelines, a corporation convicted of a felony is required to serve a probation between: A. One and five years B. One and ten years C. One and three years D. Five and ten years

A. One and five years Where the offending organization has committed a felony, probation must run for at least one year. In no case may probation run for more than five years.

According to modern criminological studies, ________________ is/are the determinant aspect(s) of white-collar crime. A. Organizational opportunity B. Financial constraints C. Social status D. None of the above

A. Organizational opportunity Of all factors, organizational opportunity remains the determinant aspect of white-collar crime. Against Sutherland's emphasis on an elite group running high-class sting operations, later studies show that organization and complexity make a larger difference than the offender's social status.

The information contained in the Uniform Crime Reports is taken from: A. Police departments B. Court filings C. Public surveys D. All of the above

A. Police departments The Federal Bureau of Investigation (FBI) compiles statistics on the extent of crime in the United States in a document called the Uniform Crime Report (UCR). The report is put together on the basis of information voluntarily submitted by more than l5,000 law enforcement departments. This includes virtually every significant public policing agency in the country.

One of the biggest differences between the police function in the United States and Europe is that in the United States: A. Police operate with local autonomy B. Police are much less educated C. Police operate on a national basis D. Police are much better educated

A. Police operate with local autonomy Law enforcement in the United States differs in important regards from that in countries such as France and Great Britain. Most notably, European forces tend to be national, so that coordination amongst them is likely to be better than in America. There also is less likelihood of corruption. In Britain, for instance, officers generally are recruited from places other than where they will work, so that they will not bring to the job prior personal relationships that may hinder their effectiveness. In the United States, there has been a constant parade of corruption scandals that involve the police in the country's larger cities, often in connection with vice operations, matters such as numbers gambling, prostitution, and narcotics.

In the area of criminal justice sanctions, ______________ is a sentence imposed prior to (and instead of) incarceration. A. Probation B. Pretrial diversion C. Parole D. None of the above

A. Probation Many laypersons confuse probation with parole. Parole refers to the status of an offender after he has been released from prison or jail and is placed under supervision in the community. Probation typically is a sentence imposed prior to (and instead of) incarceration. Some judges, however, favor what is called "shock probation." They insist that the offender serve a brief time-perhaps only a week-in a penal institution in order to get a taste of what can be in store for them if they do not adhere to the law and to the probation conditions that are imposed upon them.

In the United States, the best-known explanation regarding crime causation is: A. The theory of differential association B. The theory of operant-utilitarianism C. The theory of differential reinforcement D. None of the above

A. The theory of differential association The theory of differential association is undoubtedly the best-known among all explanations offered in the United States to account for crime, though it too has been widely criticized on the grounds that it is just about impossible to test. The theory first appeared as a systematic formulation in 1939 in the third edition of Edwin H. Sutherland's Principles of Criminology. Later, Sutherland would make his best-known contribution to criminology by coining the phrase white-collar crime and writing a monograph on the subject.

According to research, most embezzlers decide to commit their crimes because: A. They are living beyond their means B. They have drug problems C. They are essentially dishonest D. None of the above

A. They are living beyond their means Donald R. Cressey found in a 1953 study of embezzlers that most of those he examined "had lived beyond their means for some time before deciding to embezzle." Later authors have extended this statement more generally, remarking, "The most interesting fact about the white-collar offenders' aggregate financial status is not the value of their assets but the extent of their liabilities." Offenders often "have the material goods associated with successful people but may barely be holding their financial selves together." These people have assembled a structure of respectability, but it is often built on the sands of debt.

The commission formed in 1987 with the purpose of defining the responsibility of the auditor in preventing and detecting fraud is known as the: A. Treadway Commission B. Gephart Commission C. Klaas Commission D. None of the above

A. Treadway Commission The National Commission on Fraudulent Financial Reporting (commonly known as the Treadway Commission) was established in 1987 with the purpose of defining the responsibility of the auditor in preventing and detecting fraud. The commission was formed by the major professional auditing organizations-the American Institute of CPAs, the Institute of Internal Auditors, and the National Association of Accountants.

According to the differential reinforcement theory, behavior is reinforced when positive rewards are gained or punishment is avoided. A. True B. False

A. True According to the differential reinforcement theory, people learn social behavior by operant conditioning, behavior controlled by stimuli that follow the behavior. Behavior is reinforced when positive rewards are gained or punishment is avoided (negative reinforcement). It is weakened by negative stimuli (punishment) and loss of reward (negative punishment). Whether deviant or criminal behavior is begun or persists depends on the degree to which it has been rewarded or punished and the rewards or punishments attached to its alternatives. This is the theory of differential reinforcement.

According to the differential reinforcement theory, the extent that criminal behavior is perpetrated by a person depends on the degree to which that person has been either rewarded or punished for behavior. A. True B. False

A. True According to the differential reinforcement theory, people learn social behavior by operant conditioning, behavior controlled by stimuli that follow the behavior. Behavior is reinforced when positive rewards are gained or punishment is avoided (negative reinforcement). It is weakened by negative stimuli (punishment) and loss of reward (negative punishment). Whether deviant or criminal behavior is begun or persists depends on the degree to which it has been rewarded or punished and the rewards or punishments attached to its alternatives. This is the theory of differential reinforcement.

The definition of an effective compliance program is one that is reasonably designed, implemented, and enforced so that it generally will be effective in preventing and detecting criminal conduct. A. True B. False

A. True An effective compliance program is one that is reasonably designed, implemented, and enforced so that it generally will be effective in preventing and detecting criminal conduct. The guidelines require that an organization exercise due diligence in seeking to prevent and detect criminal conduct by its employees.

A Certified Fraud Examiner is required, at a minimum, to maintain the average of 20 hours of continuing professional education annually. At least half of that education must relate directly to the detection or deterrence of fraud. If a Certified Fraud Examiner fails to do so, he or she will be in violation of the Certified Fraud Examiner Code of Professional Ethics. A. True B. False

A. True Article VIII of the Certified Fraud Examiner Code of Professional Ethics states "A CFE shall continually strive to increase the competence and effectiveness of professional services performed under his or her direction." If the Certified Fraud Examiner fails to maintain the required continuing professional education, he or she is in violation of Article VIII of the Code.

Certification programs must be licensed by the state. A. True B. False

A. True Certification programs may or may not be regulated by state statute. Some, like CPAs, doctors, and lawyers, are regulated. Others, like the Certified Fraud Examiner and Certified Internal Auditor, are self-regulating.

In a complex organizational structure, it is less likely that misbehavior will be detected and punished than in a simple organizational structure. A. True B. False

A. True Complex companies provide a structure that can foster misbehavior. They provide many settings where misconduct is possible. They isolate those settings in departments and in locations around a city, the country, or the world. The isolation, in turn, means that information about what one part of a company is doing may be unknown in another part. All this reduces the risk that misbehavior will be detected and punished. The larger a company grows, the more specialized its sub-units tend to become. An internally diversified company may have few employees who fully understand the detailed workings.

A fraud prevention program will generally not be effective if a company does not punish employees who violate the program. A. True B. False

A. True Enforcing a compliance program means adhering to a system of disciplinary actions for rule breakers. Employees must know that if they violate the company's compliance policy, they will be punished. The opportunity to commit fraud is psychologically more acceptable when employees believe fraud normally goes undetected and unprosecuted. New employees should be advised of the compliance program at the time of hire, and should sign an annual statement acknowledging their understanding of it. The range of possible punishments for violations of the policy should be spelled out.

Social control theory asserts that institutions of every social system press its individuals into social conformity. A. True B. False

A. True Essentially, control theory argues that the institutions of the social system train and press those with whom they are in contact into patterns of conformity. Schools train for adjustment in society, peers press the ethos of success and conventional behavior, and parents strive to inculcate law-abiding habits in their youngsters even, Hirschi stresses, parents who themselves play fast and loose with the rules. The theory rests on the thesis that to the extent a person fails to become attached to the variety of control agencies of the society, his or her chances of violating the law are increased.

Social control theory asserts that the farther an individual strays from the norms of a society, the more likely he or she is to commit a crime. A. True B. False

A. True Essentially, control theory argues that the institutions of the social system train and press those with whom they are in contact into patterns of conformity. Schools train for adjustment in society, peers press the ethos of success and conventional behavior, and parents strive to inculcate law-abiding habits in their youngsters even, Hirschi stresses, parents who themselves play fast and loose with the rules. The theory rests on the thesis that to the extent a person fails to become attached to the variety of control agencies of the society, his or her chances of violating the law are increased. This doctrine edges very close to being self-evident in its insistence that close affiliation with law-abiding people, groups, and organizations is predictive of law-abiding behavior, but it is notably rich with subordinate statements, some of them far from obvious.

According to criminologist Donald Cressey, one nonsharable problem which may lead to occupational crime is poor employer-employee relationships. A. True B. False

A. True Finally, Cressey described problems resulting from employer-employee relationships. The most common, he stated, was an employed person who resents his status within the organization in which he is trusted. The resentment can come from perceived economic inequities, such as pay, or from the feeling of being overworked or underappreciated. Cressey said this problem becomes nonsharable when the individual believes that making suggestions to alleviate his perceived maltreatment will possibly threaten his status in the organization. There is also a strong motivator for the perceived employee to want to "get even" when he feels ill treated.

According to the Corporate Sentencing Guidelines, a corporate policy that mitigates the effect of an occurrence of fraud can reduce an organization's fine by as much as 95%. A. True B. False

A. True Fines are based on two factors: the seriousness of the offense and the level of culpability by the organization. The seriousness of the offense determines the base fine to be imposed. This figure can be quite high. The organization's culpability is a measure of the actions taken by the organization which either mitigated or aggravated the situation. Depending on the culpability of the organization, the base fine can be increased by as much as 400% or reduced by as much as 95%.

An excellent method for uncovering fraud within an organization is to ask the organization's employees about possible fraudulent activities. A. True B. False

A. True Fraud Assessment Questioning is a non-accusatory interview technique used as a part of a normal audit. It operates on the theory that employees' attitudes are a good indicator of potential problems, and that one of the most effective ways to deal with fraud is to ask about it

The existence of a thorough control system is essential to fraud prevention. A. True B. False

A. True Fraud prevention requires a system of rules, which, in their aggregate, minimize the likelihood of fraud occurring while maximizing the possibility of detecting any fraudulent activity that may transpire. The potential of being caught most often persuades likely perpetrators not to commit the fraud. Because of this principle, the existence of a thorough control system is essential to fraud prevention.

According to the Corporation Sentencing Guidelines, the presence of an effective program to prevent and detect fraud within a company can lead to more lenient sentences in the event of criminal activity. A. True B. False

A. True Guideline legislation is one of the most dramatic changes in criminal law in the history of this country. The guidelines not only seek to make punishments more uniform, they unquestionably and dramatically increase the severity of the punishment where certain aggravating factors are present. Conversely, the presence of an effective program to prevent and detect violations of the law is rewarded with a more lenient sentence. That reward can be worth several million dollars at the time of sentencing.

According to Richard C. Hollinger and John P. Clark, employees steal primarily as a result of workplace conditions. A. True B. False

A. True In 1983, Richard C. Hollinger of Purdue University and John P. Clark of the University of Minnesota published federally funded research involving surveys of nearly 10,000 American workers. Their book, "Theft by Employees," reached a different conclusion than Cressey. They concluded that employees steal primarily as a result of workplace conditions, and that the true costs of the problem are vastly understated: "In sum, when we take into consideration the incalculable social costs . . . the grand total paid for theft in the workplace is no doubt grossly underestimated by the available financial estimates."

White-collar criminals are more likely to be fined than to face prison terms as punishment. A. True B. False

A. True More often than prison, the punishment of choice for white-collar criminals is the imposition of fines. Whereas six percent of the "common criminals" in one notable survey received fines, all of the antitrust violators did.

Most codes of professional ethics for organizations (including the Code of Professional Ethics for the Association of Certified Fraud Examiners) have characteristics of the imperative theory. A. True B. False

A. True Most professional codes of ethics have characteristics of the imperative theory. As a general matter, professionals are expected to act in a manner consistent with their self-imposed rules. However, public critics frequently question not only conduct itself but the rules upon which it is based. Some critics, for example, argue that many of the ethical rules by professionals are designed to be self-serving.

Two selling points of a fraud prevention program are fraud's potentially negative impact on a company's profits and public image. A. True B. False

A. True One of the best ways to sell management on fraud prevention is by showing the impact on the bottom line. Fraud impacts net sales dollar for dollar. For example, if a company nets 20 percent on sales, they must sell five items at regular prices to recover losses from the theft of one item. Fraud can be very expensive. Additionally, many corporate executives are more sensitive to adverse publicity than almost any other issue. Certainly, one way to convince management of the logic of fraud prevention is to point out that negative publicity, even in small cases, can have a devastating impact on the bottom line. This negative impact can be eliminated or reduced by a proactive fraud prevention program.

One of the key elements of ethics is a concept called reflective choice. A. True B. False

A. True One of the key elements in ethics is reflective choice. Ethical problems almost always involve projecting yourself into a future in which you have to live with your decisions. Professional ethics decisions usually turn on these questions: "What written and unwritten rules govern my behavior?" and "What are the possible consequences of my choices?"

In the area of sanctions, criminologists have found that condemnation of family and friends is actually more of a deterrent to crime than going to prison for most people. A. True B. False

A. True Social control in the workplace, according to Hollinger and Clark, consists of both formal and informal social controls. The former control can be described as external pressures through both positive and negative sanctions; the latter, the internalization by the employee of the group norms of the organization. These researchers, along with a host of others, have concluded that-as a general proposition-informal social controls provide the best deterrent. "These data clearly indicate that the loss of respect among one's acquaintances was the single most effective variable in predicting future deviant involvement." Furthermore, "in general, the probability of suffering informal sanction is far more important than fear of formal sanctions in deterring deviant activity."

Cressey found that embezzlers often experienced a sense of physical isolation. A. True B. False

A. True The fourth category of nonsharable problems Cressey described is physical isolation, in which the person in financial straits is isolated from the people who can help him.

The typical white-collar crime offender is a white male with a moderate social status. A. True B. False

A. True The wide array of crimes called "white-collar"-from antitrust and securities violations to bank embezzlement and credit fraud-makes assembling a profile of the typical offender difficult, but not impossible. Most defendants are white males, with a moderate social status. They are slightly more likely than the general population to have a high school diploma (78 percent versus 69 percent), or a college degree (24.7 percent versus 19 percent for the general public).

A Certified Fraud Examiner accepts an assignment to conduct a fraud examination of the cash function of a business. Because the Certified Fraud Examiner was in a hurry to complete the job, she overlooked key items of evidence and failed to uncover a major fraud. This examiner may have violated the Certified Fraud Examiner Code of Ethics. A. True B. False

A. True This action would be in violation of Article I of the Certified Fraud Examiner Code of Professional Ethics. This article states that: "A CFE shall at all times demonstrate a commitment to professionalism and diligence in the performance of his or her duties."

Incentives programs and task-related bonuses are reinforcement strategies that can be successfully utilized in the workplace. A. True B. False

A. True When managers are faced with disgruntled employees, they can modify these emotional circumstances, not just with "image" work, but with adequate compensation and by recognizing workers' accomplishments. Incentives programs and task-related bonuses follow this principle, assuming that employees who feel challenged and rewarded by their jobs will produce more work at a higher quality, and are less likely to violate the law.

White-collar crime defendants are more likely to receive bail than "common criminals." A. True B. False

A. True White-collar defendants receive bail rather easily: just one person in eight spends any time incarcerated before trial, and for the generally high-status antitrust defendants, the figure is fewer than one in 20. By comparison, in a control group of "common criminals"-i.e., people convicted of the "nonviolent economic crimes" of postal theft or postal fraud-at least 1/3 of the defendants spent time in jail before going to trial.

In criminology, there is a direct correlation between age and crime. At what age do arrests for violent crime peak? A. 21 B. 18 C. 25 D. 15

B. 18 The most obvious factor that plays into the amount of crime that will be manifest is the birth rate. The number of street crimes rises when a baby boom generation reaches adolescence, and it declines when that generation "ages out" of the early crime-prone years. Peaks and valleys in the number of people in different age groups will cause corresponding changes in crime rates. As America's population ages, however, it is anticipated that there will be a rise in white-collar crime because such offenses most often are committed by older persons who have worked themselves into positions of power and responsibility. While youths from 15 to 18 make up only about 6 percent of the American population, they account for about 25 percent of all arrests for Part I offenses. The peak age for property crime is about l6 years, while for violent crime the high point is about l8 years.

Baker, a CFE, was involved in the investigation of a criminal fraud case where the suspect was not permitted to plea bargain. In which state is plea bargaining not allowed? A. North Dakota B. Alaska C. Maine D. Montana

B. Alaska In the plea bargain process, the defendant's attorney works out a deal with the prosecutor. Generally the charge is reduced in exchange for a guilty plea. Plea bargaining is endemic in American criminal justice, although it is not allowed in Alaska, where a state-operated court system and a relatively small number of cases permit the system to function without it.

There are five principal characteristics which distinguish professional fields from other vocations. Which of the following is NOT one of them? A. A specialized body of knowledge B. All members must have earned advanced degrees C. Standards of conduct governing professional relationship D. Recognition and acceptance by society

B. All members must have earned advanced degrees The five principal characteristics that differentiate professional fields of endeavor from other vocations are: (1) a body of specialized knowledge acquired through formal education; (2) admission to the profession governed by standards of professional qualifications; (3) a concomitant pair: recognition and acceptance by society of professional status, and concurrent recognition and acceptance of social responsibility by the professional; (4) standards of conduct governing relationships of the professional with clients, colleagues, and the public; and (5) a national organization devoted to the advancement of the social obligations of the professional group.

In the area of street crime, a great deal of the offenses are committed by a small core of career criminals. Which of the following is NOT one of the generally recognized traits of career criminals? A. Prior incarcerations B. Cocaine use C. Unemployment D. All of the above are recognized traits

B. Cocaine use Researchers have found that offenders can roughly be divided into two major groups: those who occasionally commit crimes and a much smaller group made up of chronic offenders. A Philadelphia study determined that 52 percent of all street crimes were committed by 6 percent of the offenders. This group accounted for between 70 and 80 percent of all offenses in the area. Career criminals, the research suggests, have the following characteristics: * They have been incarcerated for more than half of the two-year period preceding their most recent arrest * They had a juvenile conviction prior to the age of l6 * They abused heroin or barbiturates during the two-year period prior to their current arrest, or had a pattern of such use as juveniles * They had held a job for less than half of the two-year period preceding their arrest

There are two primary strategies to control corporate criminal behavior. They are: A. Enforcement and compliance B. Compliance and deterrence C. Deterrence and enforcement D. None of the above

B. Compliance and deterrence Enforcement strategies include two main theories: compliance and deterrence. Compliance hopes to achieve conformity to the law without having to detect, process, or penalize violators. Compliance systems provide economic incentives for voluntary compliance to the laws and use administrative efforts to control violations before they occur. As a strategy to control crime, deterrence is designed to detect law violations, determine who is responsible, and penalize offenders in order to deter future violations. Deterrence systems try to control the immediate behavior of individuals, not the long-term behaviors targeted by compliance systems.

The theory of differential association is used frequently to explain white-collar criminality. Which of the following is NOT one of the assertions or principles of differential association? A. Differential association may vary in frequency B. Criminal behavior is learned by a process of absorption C. Criminal behavior is learned D. All of the above are principles of differential association

B. Criminal behavior is learned by a process of absorption The theory of differential association was developed by criminologist Edwin Sutherland. It states that: (1) criminal behavior is learned; (2) it is learned from other people in a process of communication; (3) criminal behavior is acquired through participation with intimate personal groups; (4) the learning process includes the shaping of motives, drives, rationalizations and attitudes; (5) motives are learned from definitions of legal codes as being favorable or unfavorable; (6) a person becomes criminal because of an excess of definitions favorable to violation of the law over definitions unfavorable to violation of the law; (7)differential association may vary in frequency, duration, priority, and intensity; (8) learning criminal behavior involves all the mechanisms of other learning; (9) learning differs from pure imitation; and (10) while criminal behavior is an expression of general needs and values, it is not explained by these needs and values.

When the choice of alternative actions affects the well-being of others, either individually or collectively, and the right choice is not absolutely clear, this is called a(n): A. Moral dilemma B. Ethical problem situation C. Problem situation D. None of the above

B. Ethical problem situation A problem situation exists when you must make a choice among alternative actions and the right choice is not absolutely clear. An ethical problem situation is a problem situation in which the choice of alternative actions affects the well-being of other people, whether individually or collectively.

A report by a Certified Fraud Examiner is privileged from discovery by anyone other than the client. A. True B. False

B. False "Privileged information" is information that cannot be demanded, even by a court. Common-law privileges exist for husband-wife and attorney-client relationships, and physician-patient and priest-penitent relationships have obtained the privilege through state statutes. In all the recognized privileged relationships, the professional person is obligated to observe the privilege, which can be waived only by the client, patient, or penitent. Likewise, the Certified Fraud Examiner's client or employer is the holder of the confidence. Certified Fraud Examiners, like CPAs and similar professionals, do not have protected privileges in common-law or statute.

A CFE generally would not be able to accept an assignment to uncover fraud in a company in which he or she has a major interest. A. True B. False

B. False A Certified Fraud Examiner does not have the same responsibilities as a Certified Public Accountant. A CPA generally would not be able to express an audit opinion on a company in which he or she held a major financial interest. In the case of this Certified Fraud Examiner, he would be able to accept such an assignment under most conditions, since the goal of the Certified Fraud Examiner is to gather facts regarding a potential fraud, not express an opinion. The examiner should, however, make appropriate disclosures regarding his ownership. Article II of the Certified Fraud Examiner Code of Professional Ethics states: "A CFE shall not engage in any illegal or unethical conduct, or any activity which would constitute a conflict of interest."

According to a study conducted by Dr. Steve Albrecht, college graduates are more likely than non-college graduates to spend the proceeds of an occupational crime on luxuries, such as extravagant vacations or expensive automobiles. A. True B. False

B. False According to Dr. Steve Albrecht, perpetrators who were interested primarily in "beating the system" committed larger frauds. However, perpetrators who believed their pay was not adequate committed primarily small frauds. Lack of segregation of responsibilities, placing undeserved trust in key employees, imposing unrealistic goals, and operating on a crisis basis were all pressures or weaknesses associated with large frauds. College graduates were less likely to spend the proceeds of their loot to take extravagant vacations, purchase recreational property, support extramarital relationships, and buy expensive automobiles. Finally, those with lower salaries were more likely to have a prior criminal record.

According to a study conducted by Dr. Steve Albrecht, occupational crime perpetrators who believed their pay was not adequate committed primarily large frauds. A. True B. False

B. False According to Dr. Steve Albrecht, perpetrators who were interested primarily in "beating the system" committed larger frauds. However, perpetrators who believed their pay was not adequate committed primarily small frauds. Lack of segregation of responsibilities, placing undeserved trust in key employees, imposing unrealistic goals, and operating on a crisis basis were all pressures or weaknesses associated with large frauds. College graduates were less likely to spend the proceeds of their loot to take extravagant vacations, purchase recreational property, support extramarital relationships, and buy expensive automobiles. Finally, those with lower salaries were more likely to have a prior criminal record.

Article V of the Certified Fraud Examiner Code of Professional Ethics states in part that, "No opinion should be expressed regarding the guilt or innocence of any person or party." During an accusatory interview of Black, a Certified Fraud Examiner accused Black of having committed a fraud. This examiner is in violation of Article V. A. True B. False

B. False Article V of the Certified Fraud Examiner Code of Professional Ethics states: "A CFE, in conducting examination, will obtain evidence or other documentation to establish a reasonable basis for any opinion rendered. No opinion shall be expressed regarding the guilt or innocence of any person or party." Although it does not specifically state such, the above Article really applies to statements made to third parties. If the Certified Fraud Examiner was interviewing a suspect whose guilt was highly probable, the Code would not prohibit the examiner from making accusations. The admission-seeking process, used extensively by Certified Fraud Examiners, requires accusations be made of the probable guilty party. As long as these accusations are not communicated to third parties, the Certified Fraud Examiner would not be in violation of the Code.

A Certified Fraud Examiner conducted a fraud examination that resulted in the dismissal of Warren, Chief Financial Officer. Numerous internal control deficiencies permitted Warren to commit the fraud. But since the examiner was not hired to evaluate controls, he did not mention the internal control deficiencies in his report to management. According to the Certified Fraud Examiner Code of Professional Ethics, the CFE knows he can only discuss information he was hired to investigate. A. True B. False

B. False Article VII of the Certified Fraud Examiner Code of Professional Ethics states: "A CFE shall reveal all matters discovered during the course of an examination, which, if omitted, could cause a distortion of the facts." Although the examiner was not hired to evaluate controls, his or her professional responsibilities would require the disclosure of any information which could cause a distortion of the facts.

Criminological research has generally concluded that punishing a person for a crime helps deter that person from committing other crimes in the future. A. True B. False

B. False Behavioral studies, such as those conducted by Skinner, show that punishment is the least effective method of changing behavior. Punishing brings "a temporary suppression of the behavior," but only with constant supervision and application. In repeated experiments, Skinner found that punishment-either applying a negative stimulus, or taking away a positive one-effectively extinguished a subject's behavior, but that the behavior returned "when the punishment was discontinued and eventually all responses came out" again.

According to the Federal Sentencing Guidelines, a corporation cannot be held responsible for the criminal acts of its employees. A. True B. False

B. False Corporations and other organizations can be held liable for criminal acts committed as a matter of organizational policy. Fortunately, most organizations do not expressly set out to break the law. However, corporations and other organizations may also be held liable for the criminal acts of their employees if those acts are done in the course and scope of their employment and for the ostensible purpose of benefiting the corporation. An employee's acts are considered to be in the course and scope of his employment if the employee has actual authority or apparent authority to engage in those acts.

It is generally not a good idea to ask employees in your organization whether or not they believe fraud is occurring because it gives the impression that management is unaware of the fraud risks of the organization. A. True B. False

B. False Fraud Assessment Questioning is a non-accusatory interview technique used as a part of a normal audit. It operates on the theory that employees' attitudes are a good indicator of potential problems, and that one of the most effective ways to deal with fraud is to ask about it.

A Certified Fraud Examiner was hired to investigate a company. After he carefully examined the company, he issued a report that stated, in part, "... in my opinion, this operation is free of material fraud." Such an opinion is permitted under the Certified Fraud Examiner Code of Professional Ethics. A. True B. False

B. False Fraud examiners must always perform their work with skepticism, beginning with the belief that something is wrong or someone is committing a fraud. This attitude may make fraud examinations extensive and expensive. Opinions or attestations of a fraud-free environment are prohibited for Certified Fraud Examiners. This is for the protection of the Certified Fraud Examiner -- we only know for sure that fraud exists when some event or transgression causes it to be uncovered.

Clinard and Yeager, in their studies, found that illegal behavior by a corporation is most often suppressed by consumer pressure. A. True B. False

B. False If illegal behavior resulted in decreased patronage or even consumer boycotts, consumer pressure would be an effective tool in the control of illegal corporate behavior. However, say Clinard and Yeager, it appears to not be very effective. Consumers often are unaware when a corporation's products are unsafe or when it has been violating antitrust laws or polluting the environment. Without organized behavior, a consumer's withdrawal of individual patronage generally is ineffective.

Most experts agree that it is much easier to detect fraud than it is to prevent it. A. True B. False

B. False Most experts agree that it is much easier to prevent than detect fraud. To prevent fraud, we should understand something about the mind of the potential perpetrator. Increasing the perception of detection might be the most effective fraud prevention method. Controls, for example, do little good in forestalling theft and fraud, if those at risk do not know of the presence of possible detection.

Sue, a Certified Fraud Examiner, is hired by a client to conduct a fraud examination. She found nothing amiss. A year later, she was subpoenaed by the local district attorney's office to provide the client's file. Under the Certified Fraud Examiner Code of Professional Ethics, she will not be able to respond to the subpoena. A. True B. False

B. False Two articles cover the action by Sue. Article IV of the Certified Fraud Examiner Code of Professional Ethics states: "A CFE will comply with lawful orders of the courts, and will testify to matters truthfully and without bias or prejudice." Article VI says: "A CFE shall not reveal any confidential information obtained during an engagement without proper authorization." In this particular situation, the Certified Fraud Examiner must comply under Article IV, even though Article VI seems to be at odds. The latter states "... without proper authorization." It does not state that the authorization has to come from the client. A subpoena is proper authorization under the Code of Professional Ethics.

Among countries with heavy urbanization, advanced technological development, and a relatively high standard of living, the United States has a very low crime rate. A. True B. False

B. False Two facts dominate any review of American crime statistics: * The United States demonstrates a strikingly high rate of crime compared to other countries which share most of its characteristics, that is, heavy urbanization, advanced technological development, and a relatively high standard of living. * While American crime rates remain high in terms of international comparisons, there has been a dramatic decrease in the U.S. crime rate during the past six years.

Under the Corporate Sentencing guidelines, an organization's base fine is the lowest of three numbers: * The monetary loss suffered by the victim, * The pecuniary gain received by the defendant, or * An amount ranging from $5,000 to $72,500,000 as set forth in the Offense Level Scale Individual Guidelines. This is a table of preset penalties based on the seriousness of possible offenses. A. True B. False

B. False Under the Corporate Sentencing guidelines, an organization's base fine is the highest of three numbers: * The monetary loss suffered by the victim, * The pecuniary gain received by the defendant, or * An amount ranging from $5,000 to $72,500,000 as set forth in the Offense Level Scale Individual Guidelines. This is a table of preset penalties based on the seriousness of possible offenses.

Under the imperative principle of ethics, lying cannot be justified. A. True B. False

B. False Under the imperative principle of ethical philosophy, the rules of conduct are fairly absolute. There are, however, certain exceptions. For example, it is moral to lie in situations involving self-defense. To Kant, the reasons to break his strict moral code include self-defense, extortion, or malicious misuse.

There are two general types of pardons. They are: A. General and unconditional B. Full and absolute, and conditional C. Political and general D. None of the above

B. Full and absolute, and conditional A person may apply for a pardon that, if granted, releases that person from further punishment and restores the civil rights that are forfeited upon conviction. These rights include the right to vote, serve on a jury or hold public office. There are two types of pardons: "full and absolute" and "conditional." Full and absolute pardons are usually granted only after conviction and upon showing that the offender was, in fact, innocent. The full and absolute pardon President Nixon received from President Ford before impeachment proceedings began was a rare exception to this rule. A conditional pardon usually implies guilt and for this reason may be rejected by the beneficiary. The grant of any pardon or other clemency is usually a prerogative of the Executive Branch and may not be compelled by the petitioner.

Ethical issues are common for fraud examiners. Two aspects of ethics operate in the professional environment. These two aspects are: A. Specific ethics and general ethics B. General ethics and professional ethics C. Professional ethics and specific ethics D. None of the above

B. General ethics and professional ethics Two aspects of ethics operate in the professional environment -- general ethics (the spirit) and professional ethics (the rules). Mautz and Sharaf (1961) have contributed the following thoughts to the association of general ethics and professional ethics: "The theory of ethics has been a subject of interest to philosophers since the beginnings of recorded thought. Because philosophers are concerned with the good of all mankind, their discussions have been concerned with what we may call general ethics rather than the ethics of small groups such as the members of a given profession. We cannot look, therefore, to their philosophical theories for direct solutions to our special problems. Nevertheless, their work with general ethics is of primary importance to the development of an appropriate concept in any special field. Ethical behavior in auditing or in any other activity is no more than a special application of the general notion of ethical conduct devised by philosophers for men generally."

Under the Corporate Sentencing Guidelines, courts are required to impose probation on offending organizations under all of the following circumstances EXCEPT: A. To secure payment of restitution B. If the organization has not previously committed similar misconduct C. In the instance that the sentence did not include any fine D. All of the above are mandatory probation situations

B. If the organization has not previously committed similar misconduct Courts are required to impose probation on offending organizations under the following circumstances: * To secure payment of restitution, enforcement of a remedial order, or to ensure completion of community service * To safeguard the organization's ability to pay a monetary penalty that was not fully paid at the time of sentencing * When an organization with at least 50 employees did not have an effective program to detect and prevent violations of law * When the organization was adjudicated within the past five years to have committed misconduct similar to any part of the misconduct of the instant offense * When such an order is necessary to ensure changes are made to reduce the likelihood of future criminal conduct * When the sentence does not include a fine * When such an order is necessary in order to accomplish one or more purposes of sentencing set forth in 18 U.S.C., Section 3553(a)(2)

Who is generally credited with developing the utilitarian principle of ethics? A. Marcus G. Singer B. John Stuart Mill C. Donald Cressey D. Immanuel Kant

B. John Stuart Mill John Stuart Mill (1806-1873) is known as the apostle of the principle of utilitarianism, originated earlier by Jeremy Bentham. This principle maintains that the ultimate criterion for an ethical decision is the balance of good consequences (pleasure and avoidance of pain) over evil consequences (displeasure and pain) produced by an action.

Transactions between complex organizations sometimes can be an avenue for corporate misconduct or organizational crimes. Vaughn identified four distinguishing characteristics of transactions. Which of the following is NOT one of them? A. Formalization B. Specific monitoring procedures C. Reliance on trust D. Complex processing and recording methods

B. Specific monitoring procedures Transactions between complex organizations can add to the potential for misconduct by offering legitimate means of pursuing scarce resources unlawfully and by providing an opportunity to hide unlawful behavior. Vaughan identified four characteristics of transactions: formalization, complex processing and recording methods, reliance on trust, and general rather than specific monitoring procedures.

How many years of professional experience are required in order to be awarded the Certified Fraud Examiner designation? A. Three B. Two C. Four D. One

B. Two One can sit for the Certified Fraud Examiner examination the last semester in college. However, to be awarded the designation, one must have a minimum of two years experience in a field related to fraud detection or deterrence before being certified.

_________ are the personal and social criteria that are learned and internalized through a wide variety of influences-family, social status, peer groups, national origin, and the like. A. Ethics B. Values C. Principles D. Morals

B. Values Values are the personal and social criteria that are learned and internalized through a wide variety of influences-family, social status, peer groups, national origin, and the like.

Certified Fraud Examiners are required under the Code of Professional Ethics to maintain continuing professional education. On an annual basis, Certified Fraud Examiners are required to obtain an average of how many hours of continuing professional education? A. 40 hours B. 30 hours C. 20 hours D. None of the above

C. 20 hours Continuing professional education is required of a Certified Fraud Examiner under Article I of the Code which states: "A CFE shall continually strive to increase the competence and effectiveness of professional services performed under his or her direction." Certified Fraud Examiners currently are required to have 20 hours of continuing professional education annually. Half of this amount must relate directly to the detection or deterrence of fraud.

There are five principal characteristics which distinguish professional fields from other vocations. Which of the following is NOT one of them? A. Recognition and acceptance by society B. Standards of conduct governing professional relationship C. All members must have earned advanced degrees D. A specialized body of knowledge

C. All members must have earned advanced degrees The five principal characteristics that differentiate professional fields of endeavor from other vocations are: (1) a body of specialized knowledge acquired through formal education; (2) admission to the profession governed by standards of professional qualifications; (3) a concomitant pair: recognition and acceptance by society of professional status, and concurrent recognition and acceptance of social responsibility by the professional; (4) standards of conduct governing relationships of the professional with clients, colleagues, and the public; and (5) a national organization devoted to the advancement of the social obligations of the professional group.

Many sociologists think a company's size contributes to organizational crimes. One of the reasons is that the large company becomes too unwieldy for executives to manage. This concept is called: A. Communication degeneration B. Organizational distancing C. Authority leakage D. Departmental distancing

C. Authority leakage Vaughan writes that organizational growth naturally leads to a progressive loss of control over departments. Executives cannot hope to keep track of all the units of a large company, and must rely on subordinates to carry out policy. Vaughn states that when the distance between top executives and subordinate units grows to a sufficient level, "authority leakage" results. Such leakage allows subsidiaries, company researchers, accountants or other departments to engage in misconduct since there are inadequate internal controls to check the behavior.

Which of the following is NOT considered a part of a proactive audit policy? A. Fraud assessment questioning B. Surprise audits C. Decreased use of analytical review D. Enforced mandatory vacations

C. Decreased use of analytical review Proactive fraud policies are generated from the top of the operation. A proactive policy simply means that the companies will aggressively seek out possible fraud, instead of waiting for instances to be otherwise uncovered. This can be accomplished by several means, including: (1) increased use of analytical review, (2) fraud assessment questioning, (3) enforcement of mandatory vacations, (4) job rotation, and (5) surprise audits where feasible.

In the area of criminological theory, ____________ is the theory that tries to prevent a crime before it occurs by using the threat of criminal sanctions. A. Prevention B. Punishment C. Deterrence D. None of the above

C. Deterrence As a strategy to control crime, deterrence is designed to detect law violations, determine who is responsible, and penalize offenders in order to deter future violations. Deterrence systems try to control the immediate behavior of individuals, not the long-term behaviors targeted by compliance systems. Deterrence theory assumes that humans are rational in their behavior patterns. Humans seek profit and pleasure while they try to avoid pain. Deterrence assumes that an individual's propensity toward lawbreaking is in inverse proportion to the perceived probability of negative consequences.

Freud defines biological urges and wants as: A. Superego B. Ego C. Id D. None of the above

C. Id Freud identified a three-part structure to human personality: the id (the drive for food, sex, and other life-sustaining things), the superego (the conscience which develops when learned values become incorporated into a person's behavior), and the ego (the "I" or the product of the interaction between what a person wants and what his conscience will allow him to do to achieve what he wants).

One philosophical principle of ethics maintains that a decision should be made without trying to predict whether an action will probably cause the greatest balance of good over evil. This school of thought is called the: A. Generalization principle B. Utilitarian principle C. Imperative principle D. None of the above

C. Imperative principle The imperative principle directs a decision-maker to act according to the requirements of an ethical rule. Strict versions of imperative ethics maintain that a decision should be made without trying to predict whether an action will probably create the greatest balance of good over evil. Ethics in the imperative sense is a function of moral rules and principles and does not involve any calculation of the consequences. Example: "Lying is wrong."

Which of the following surveys involve interviews of crime victims? A. Uniform Crime Reports B. National Victim Survey C. National Crime Survey D. All of the above

C. National Crime Survey The National Crime Survey (NCS) is a statistical study carried out by the Bureau of the Census that annually conducts interviews with 136,000 individuals in 60,000 households about experiences of crime victimization. It shows the Uniform Crime Reports (UCR) seriously underreporting; that is, the persons interviewed report a much greater amount of crime than that which figures in the UCR.

Professional competence demands attention to three forces which may damage independence and the quality of work. Which of the following is NOT one of these forces? A. Programming B. Reporting C. Predication D. Investigation

C. Predication Professional competence demands attention to three forces that can damage the independence and quality of the work. The three forces are: programming, investigation, and reporting. Fraud examiners must remain free from interference by managers who try to restrict, specify, or modify the procedures they need to perform (programming). Certified Fraud Examiners must have the cooperation of managers and others without any attempt to control access to books, records, correspondence, and other evidence (investigation). Client or employer managers should not be allowed to overrule the Certified Fraud Examiner's judgment on the appropriateness of the content of a report (reporting).

According to Freud, the learned dictates of the social system are called: A. Id B. Ego C. Superego D. None of the above

C. Superego Freud identified a three-part structure to human personality: the id (the drive for food, sex, and other life-sustaining things), the superego (the conscience which develops when learned values become incorporated into a person's behavior), and the ego (the "I" or the product of the interaction between what a person wants and what his conscience will allow him to do to achieve what he wants).

Blue, a Certified Fraud Examiner, had a moral dilemma. The lowest level of reference for moral decisions is: A. Philosophical principles B. Individual standards C. The law D. None of the above

C. The law When faced with an ethics-related problem, it is tempting and appropriate to begin the analysis of a possible action by asking: "Is it legal?" The law deals with actions that are permitted and prohibited. With all due respect to the law, it is nevertheless the lowest level of reference for moral decisions. It happens, for example (though not frequently) that a law may permit an action that is prohibited by a profession's code of ethics.

John lost his job and his unemployment benefits were exhausted. He asked his friend Judy, a Certified Fraud Examiner and former co-worker, to look the other way while he stole food from the plant's commissary. Judy knew the act would be illegal, but she was looking for moral justification to help. The ethical principle that would most likely be used to justify this act would be the: A. Generalization principle B. Imperative principle C. Utilitarian principle D. None could be used to justify the act

C. Utilitarian principle The utilitarian principle states that the ultimate criterion for an act is the balance of good consequences over evil ones. The imperative principle would not allow Judy to assist, since it believes a decision must be made within the requirements of a strict ethical rule -- certainly helping someone steal, no matter how honorable the purpose -- would violate those rules. Under the generalization principle, "if all relevantly similar persons acting under relevantly similar circumstances would act in a certain way and the consequences would be undesirable, then no one ought to act in that way without a reason." Regardless of Judy's good motives, her conduct would violate the Certified Fraud Examiner's Code of Professional Ethics.

The aspects of affiliation addressed by the social control theory include: A. Attachment B. Belief C. Involvement D. All of the above

D. All of the above Four aspects of affiliation are addressed by the social control theory: * Attachment * Commitment * Involvement * Belief

Which of the following types of personnel can potentially bind a corporation through their own misconduct? A. Low-level employees B. Executive officers and directors C. Independent contractors D. All of the above

D. All of the above The corporate compliance policy should be communicated to everyone who can potentially bind a corporation through their own misconduct. This includes the following: * Executive officers and directors * Managers and supervisors * Low-level employees * Independent contractors

The Treadway Commission, formed in 1987 with the purpose of defining the responsibility of the auditor in preventing and detecting fraud, made which of the following recommendations? A. A Mandatory Independent Audit Committee B. Adequate Audit Resources and Authority C. A Written Company Charter D. All of the above are Treadway recommendations

D. All of the above are Treadway recommendations The Treadway Commission made four major recommendations that, in combination with other measures, are designed to reduce the probability of fraud in financial reports: * Mandatory Independent Audit Committee. Every board of directors should have an audit committee made up of outside directors. * Written Charter. Companies should develop a written charter which sets forth the duties and responsibilities of the audit committee. * Resources and Authority. The audit committee should have adequate resources and authority to carry out its responsibilities. * Informed, Vigilant, and Effective Audit Committees. The audit committee members must be informed, vigilant, and effective.

Efforts to control corporate crime follow three approaches. Which of the following is/are included? A. State intervention B. Consumer action C. Voluntary changes in corporate attitudes D. All of the above are approaches

D. All of the above are approaches Efforts to control corporate crime follow three approaches: voluntary change in corporate attitudes and structure; strong intervention by the state to force changes in corporate structure, accompanied by legal measures to deter or punish; or consumer action. Voluntary changes would involve the development of stronger business ethics and organizational reforms. Government controls may involve federal corporate chartering, deconcentration and divestiture, larger and more effective enforcement staffs, stiffer penalties, wider use of publicity as a sanction, and possibly the nationalization of corporations. Consumer group pressures may be exerted through lobbying, selective buying, boycotts, and the establishment of large consumer cooperatives.

Criminologist Donald Cressey divided occupational crime offenders into three categories. Which of the following is one of those categories? A. Absconders B. Independent businessmen C. Long-term violators D. All of the above are categories

D. All of the above are categories For further analysis, Cressey divided the subjects into three groups: independent businessmen, long-term violators, and absconders. He discovered that each group had its own types of rationalizations.

Which of the following is a Part I index crime? A. Robbery B. Burglary C. Automobile theft D. All of the above are index crimes

D. All of the above are index crimes The UCR divides crimes into Part I and Part II offenses. Part I offenses are murder and non-negligent manslaughter, forcible rape, robbery, aggravated assault, burglary, larceny, arson, and auto theft.

Which of the following is a good method of discovering internal fraud? A. Surprise audits B. Rotating employee duties C. Requiring employees to take vacation time D. All of the above are methods

D. All of the above are methods Proactive fraud policies are generated from the top of the operation. A proactive policy means that the organization will aggressively seek out possible fraudulent conduct, instead of waiting for instances to come to its attention. This can be accomplished by several means, including the use of analytical procedures, fraud assessment questioning, enforcement of mandatory vacations, job rotation, and surprise audits where possible.

A million dollar fraud has occurred at the ABC company. Which of the following conditions could make ABC criminally responsible for the acts of its employees? A. Management knew of the events B. Management actively participated C. Collective knowledge of the fraud by employees D. Any of the above

D. Any of the above The corporation can be held criminally responsible even if those in management had no knowledge or participation in the underlying criminal events and even if there were specific policies or instructions prohibiting the activity undertaken by the employees. The acts of any employee, from the lowest clerk on up to the CEO, can impute liability upon a corporation. In fact, a corporation can be criminally responsible for the collective knowledge of several of its employees even if no single employee intended to commit an offense. Thus, the combination of vicarious or imputed corporate criminal liability and the new Sentencing Guidelines for Organizations creates an extraordinary risk for corporations today.

According to the COSO report, there are five interrelated components of a company's internal control. Which of the following are NOT among COSO's components? A. Control Activities B. Risk Assessment C. Monitoring D. Executives' Authority

D. Executives' Authority COSO identified five interrelated components of internal control. The effectiveness of internal controls can be determined from an assessment of whether these five components are in place and functioning effectively. The five components are control environment, risk assessment, control activities, information and communication, and monitoring.

Which of the following is a key element of ethics? I. Ethics involves questions requiring reflective choice (decision problems) II. Ethics involves guides of right and wrong (moral principles) III. Ethics is concerned with values (goods) inherent in ethical decisions A. I. and II. Only B. I. and III. Only C. II. and III. Only D. I., II., and III.

D. I., II., and III. Wheelwright defined ethics as: "that branch of philosophy which is the systematic study of reflective choice, of the standards of right and wrong by which it is to be guided, and of the goods toward which it may ultimately be directed." This definition contains three key elements: I. Ethics involves questions requiring reflective choice (decision problems) II. Ethics involves guides of right and wrong (moral principles) III. Ethics is concerned with values (goods) inherent in ethical decisions

Given all of the following fraud prevention methods within organizations, which one is probably the most effective? A. Reducing rationalization B. Screening employees C. Having an open-door policy D. Increasing the perception of detection

D. Increasing the perception of detection Increasing the perception of detection may well be the most effective fraud prevention method. Controls, for example, do little good in forestalling internal theft and fraud if their presence is not known by those at risk. In the audit profession, this means letting employees, managers, and executives know that auditors are actively seeking out information concerning internal theft.

According to this theory, people obey the law because they fear punishment: A. Legitimacy B. Voluntary Compliance C. Normative Perspective D. Instrumental Perspective

D. Instrumental Perspective According to the theory of Instrumental Perspective, people obey the law because they fear punishment.

Ethical behavior has been described as behavior which produces the greatest ___________. A. Adherence B. Moral impact C. Personal happiness D. None of the above

D. None of the above There are two standard answers to what constitutes ethical behavior: (1) ethical behavior is that which produces the greatest good; and (2) ethical behavior is that which conforms to moral rules and moral principles. The most difficult problem situations arise when two or more rules conflict or when a rule and the criterion of the "greatest good" conflict.

Behavioral studies show that ___________ is the least effective method of changing behavior. A. Positive reinforcement B. Rewards C. Conditioning D. Punishment

D. Punishment Behavioral studies, such as those conducted by Skinner, show that punishment is the least effective method of changing behavior. Punishing brings "a temporary suppression of the behavior," but only with constant supervision and application. In repeated experiments, Skinner found that punishment-either applying a negative stimulus, or taking away a positive one-effectively extinguished a subject's behavior, but that the behavior returned "when the punishment was discontinued and eventually all responses came out" again.

Some criminologists think that crime rates are relatively stable; that is, the motivation to commit crime and the supply of willing offenders is fairly constant. This theory of crime is called the: A. Constant supply theory B. Stable crime theory C. Deterrence theory D. Routine activities theory

D. Routine activities theory A variation of the classical theory, routine activities theory holds that both the motivation to commit crime and the supply of willing offenders is constant; there always will be a certain number of people motivated by greed, lust, and other pro-crime forces. The determining factor in predatory crimes (violent and theft-related crimes) is the activities of the potential victims. There are purportedly three variables: * Availability of suitable targets * Absence of capable guardians (such as homeowners) * Presence of motivated offenders (such as unemployed teenagers)

When confronted with undeniable evidence of his fraud, Bob says, "My son was sick and I took the money to pay for his medical care. I did what I had to do, and I would do it again if I needed to." Bob's attitude toward his wrongdoing is an example of which of the following? A. The imperative principle B. The generalization principle C. Both the utilitarian and generalization principles D. The utilitarian principle

D. The utilitarian principle The utilitarian principle maintains that the ultimate criterion of an ethical decision is the balance of good consequences over evil consequences produced by an action. The emphasis of one form of utilitarianism, known as act-utilitarianism, is on the consequences of an action rather than the logical consistency of following a rule. In other words, the end justifies the means.