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