Chapter 3 Accounting ethics – Flashcards
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In the Pinto case, Ford relied on which approaches to ethical reasoning to decide on a course of action with respect to the faulty gas tank placement: A. Egoism and utilitarianism B. Enlightened egoism and rights theory C. Ethical legalism and utilitarianism D. Justice and rights theory
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C. Ethical legalism and utilitarianism
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The seven signs of a pending ethical collapse include all but: A. Pressure to make numbers B. Whistleblowing hotline C. Bigger than life CEO D. Doing good in the community
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B. Whistleblowing hotline
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Fraud can be defined as: A. A deliberate misrepresentation to gain an advantage over another party B. A cover-up of a mistake made in the financial statements C. An error in preparing financial statements D. All of these
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A. A deliberate misrepresentation to gain an advantage over another party
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The motivating factor for Sears to charge customers for repairs that were not needed was: A. Cover a loss from its business operations B. Greed C. Build up certain segments of its business D. All of these
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B. Greed
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In the Ethical Dissonance Model, a high person-organization fit requires: A. High organizational ethics, low individual ethics B. High organizational ethics, high individual ethics C. Low organizational ethics, high individual ethics D. Low organizational ethics, low individual ethics
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B. High organizational ethics, high individual ethics
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Assume you are an ethical person and feel uncomfortable about the way your company is reporting earnings. You believe it is deliberately overstated. If you want to bring your concerns to upper management, in which person-organization fit is it most likely that you will do so? A. High organizational ethics, low individual ethics B. Low organizational ethics, high individual ethics C. Low organizational ethics, low individual ethics D. High organizational ethics, high individual ethics
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D. High organizational ethics, high individual ethics
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According to the 2012 Global Fraud Study of the ACFE, which fraud scheme posed the greatest risks to organizations throughout the world: A. Corruption and billing schemes B. Improper use of social media C. Illegal facilitating payments D. Economic extortion
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A. Corruption and billing schemes
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Internal control over financial reporting includes each of the following elements except for: A. Maintaining accurate financial records B.Providing reasonable assurance that receipts and expenditures are recorded based on proper authorization by management C. External audit conducted in accordance with generally accepted auditing standards D. Adhering to company policies and procedures
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C. External audit conducted in accordance with generally accepted auditing standards
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The Agency Theory can best be described as: A. The relationship between top management and the board of directors B. The relationship between the board of directors and shareholders C. The relationship between top management and the board of directors, and shareholders D. The relationship between the external auditors and top management
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C. The relationship between top management and the board of directors, and shareholders
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Agency costs refer to: A. The costs incurred in monitoring managerial performance B. The costs incurred because there is information asymmetry between the corporation and outsiders C. The costs incurred because insiders know more about a company than do outsiders D. All of these
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D. All of these
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The term disgorgement means: A. To give up one's meal after eating B. To return profits earned illegally C. To return ill-gotten gains D. To give up one's board position after a fraud incident
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C. To return ill-gotten gains
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The stakeholder view emphasizes the obligations of management to: A. The shareholders B. The shareholders and creditors C. All parties impacted by corporate decisions in a significant way D. The board of directors
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c
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The fiduciary duty of the board of directors includes all of the following except for: A. Safeguarding corporate assets B. Promoting shareholder interests C. Exercising care in carrying out their responsibilities D. Representing the interests of all stakeholders
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d
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A strong and effective internal control environment can be enhanced by: A. Financial statements that present fairly financial position and results of operations B. Giving the internal auditors direct and unrestricted access to the audit committee C. Having the internal auditors report to the external auditors D. Having the external auditors report to the audit committee
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B. Giving the internal auditors direct and unrestricted access to the audit committee
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Section 302 of the Sarbanes-Oxley Act requires that management: A. Assess the company's internal controls B. Certify the financial statements C. Disclose all executive compensation D. All of these
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b
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A troubling result of the 2011 National Business Ethics Survey is: A. Increased witnessing of misconduct in the workplace. B. Decline in pressure to compromise ethics. C. Increased rate of retaliation against whistleblowers. D. Decline in negative view of supervisors' ethics.
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c
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A unique aspect of Johnson & Johnson's Credo is that it: A. It is an aspirational statement rather than the typical "thou shalt not" form of a code of ethics B. It encourages employees to internalize the values of the company C. It follows a stakeholder approach to decision making D. All of these
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d
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The 2011 National Business Ethics Survey indicates each of the following with respect to how employees view the ethics and ethical practices of organizations they work for except for: A. Misconduct at work has declined over the years B. Whistleblowing is up C. Ethical cultures are weaker D. Pressure to cut corners is lower
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c
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With respect to whistleblowing, the Sarbanes-Oxley Act: A. Protects employees of publicly traded companies who provide evidence in fraud cases B. Confers legal protection on managers who reported wrongdoing by top executives C. Confers legal protection on the board of directors for fraudulent actions by management D. All of these
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a
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What are the fiduciary obligations of the board of directors? A. Maximize profits for the company and its shareholders B. Give excessive executive compensation C. Safeguard the organization's resources and interests of the company's stakeholders D. Allow high risk accounting practices
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c
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Which of the following is not an ethical issue in business? A. Conflicts of interest B. Maximization of profits C. Discrimination D. Information technology
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b
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Which is a questionable ethical work behavior of an employee? A. Handing in all assignments on time. B. Taking time off without pay to attend to a family crisis. C. Using social media during the work day to update your Facebook page. D. Giving your best effort during work time.
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c
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What are the four pillars of corporate governance? A. Respect, accountability, fairness and transparency. B. Responsibility, accountability, firmness and transparency. C. Responsibility, accountability, fairness and transparency. D. Respect, accountability, firmness and transparency.
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c
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What is the agency problem? A. Managers place corporate goals ahead of personal goals. B. Managers place personal goals ahead of corporate goals. C. Managers place social goals ahead of personal goals. D. Managers place corporate goals ahead of social goals.
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b
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Which of the following is not used to overcome the agency problem? A. Executive compensation B. Audited financial statements C. Related party transactions D. Internal controls
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C. Related party transactions
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Compensation of executives has soared over the last forty plus years to more than 400 times the pay for average workers. Suggested remedies to rein in executive compensation especially during time of corporate wrongdoing include each of the following except for: A. Say on Pay rules B. Disgorgement C. Limits on executive compensation D. Clawbacks
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c
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The 2010 Dodd-Frank Act includes additional incentives for whistleblowers. What is the act's effect on whistleblowing by accountants? A. No accountant, internal or external, whether by job title or certification may receive a reward. B. All accountants who whistle-blow are protected against retaliation. C. Internal auditors who whistle-blow may receive a reward. D. A CPA may report a violation of a public accounting firm's performance in an audit.
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D. A CPA may report a violation of a public accounting firm's performance in an audit.
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One of the duties of a board of directors is to protect the interests of stakeholders. Which of the following is an example of protecting such interests? A. Back dating options for executives B. Deceptive business practices C. Off balance sheet financing D. Transparent financial reporting
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d
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The relationship between the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy and rule of law is known as A. Code of ethics B. Corporate sustainability C. Corporate responsibility D. Corporate governance
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d
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What is a university's equivalent of a code of ethics? A. Honor code B. Student Handbook C. Faculty Handbook D. Statement of Values
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a
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A similarity between the Bernie Madoff situation and that of R. Allen Stanford is they both were: A. The head of a major U.S. stock exchange B. The CEO of a company that went out of business after a major financial statement fraud C. Involved in Ponzi schemes D. Exonerated in a trial because of lack of evidence of wrongdoing
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C. Involved in Ponzi schemes
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An ethical organization incorporates what into their decision-making process: A. Core values B. Strategic policies C. Reporting responsibilities D. All of these
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d
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In the Parable of Sadhu case, Bowen T. MCoy's friend Steve summed up the dilemma by saying: A.I feel that what happened with the sadhu is a good example of the breakdown between ethics in different cultures B.I feel that what happened with the sadhu is a good example of the breakdown between the individual and corporate ethics C. People tend to inevitably act in their own best interest D. All of these
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b
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In the Amgen case, former employees, Shawn O'Brien and Kassie Westmoreland, sued the company for: A. Wrongful termination B. Fraudulent actions C. Discrimination D. Retaliation
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d
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The primary ethical issue in United Thermostatic Controls is: A. Misappropriation of corporate assets B. Accelerating the recording of revenue into an earlier period C. Delaying the recording of expenses into a later period D. Failure to fully disclose all information
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B. Accelerating the recording of revenue into an earlier period
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An important issue in the Hewlett Packard pretexting case was: A. Using false pretenses to obtain confidential information about members of the board of directors B. Disclosing confidential client information without the approval of the client C. Producing fraudulent financial statements D. Twittering about a competitor and driving him out of business
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a
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A major allegation in the XTO Energy case was the: A. Insider trading B. Violation of FCPA C. Breach of fiduciary duties by board of directors D. Retaliation of whistleblower
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C. Breach of fiduciary duties by board of directors
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In the Bhopal case, in evaluating its exposure to possible future liability due to technology failures, Union Carbide used which of the following concepts: A. Professional skepticism B. Business risk C. Cost-benefit analysis D. Rights Theory
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b
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The case of Steve Jobs's Health deals with: A. Disclosure issues beyond financial information B. Disclosures required of members of board of directors C. Fiduciary obligations of a CEO D. Fiduciary obligations of a board of directors
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a
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An important issue in the HP case with "event hostess" Jodie Fisher is: A. Conflict of interest of Mark Hurd B. Alleged sexual harassment of Jodi Fisher C. Disclosure of confidential client information by Hurd to Fisher D. All of these
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d
