The biggest problem in applying virtue theory to decision making is:
A. It can be difficult to evaluate the effect of virtues on others in decision making
B. It relies on moral absolutes in decision making
C. It can be difficult to determine virtues to distinguish equals from unequal claims in
decision making
D. Conflicts between virtues may make decision making more difficult
Answer:
What is the maximum amount of time an audit manager or partner may spend on
nonattest services for an attest client?
A. 20 hours
B. 15 hours
C. 10 hours
D. 8 hours
Answer:
The Institute of Internal Auditors Code of Ethics includes each of the following
principles except for:
A. Integrity
B. Objectivity
C. Independence
D. Confidentiality
Answer:
Your professor asks you to consider whether earnings management can be justified by
arguing that the net benefits of managing earnings exceeds any harms that may occur.
The professor is asking you to apply what reasoning methods to make the analysis?
A. Egoism
B. Act utilitarianism
C. Rule utilitarianism
D. Virtue
Answer:
The SEC requires stealth restatements to be
A. Disclosed only in periodic reports.
B. Disclosed only in an 8-K report or amended 10-K/A or 10-Q/A.
C. Increased to more 50 % of restatements.
D. Disclosed in ten business days after determination of need for restatement.
Answer:
As a result of Scott London’s actions to give inside tips about two audit clients, KPMG
took each of the following actions except for
A. Admitted London violated the firm’s independence rules
B. Issued a modified audit opinion on the clients financial statements because of the
adverse actions of London
C. Resigned from the engagements of the two clients
D. Withdrew its audit report on the two clients
Answer:
Each of the following techniques was used by Gemstar TV Guide International in its
accounting fraud except for:
A. Created cookie jar reserves of advertising revenue to smooth net income
B. Engaged in round trip transactions whereby Gemstar paid money to a third party to
advertise its services and capitalized that cost while the third party used Gemstar’s funds
to buy advertising from Gemstar, and the company recorded 100% of that amount as
revenue while capitalizing the cost of its advertising payments
C. Used channel stuffing to accelerate the recording of revenue into earlier periods
D. Inflated advertising revenue from nonmonetary and barter transactions
Answer:
Each of the following were themes of the investigations of the accounting profession
during the 1970s and 1980s except for:
A. Whether low-balling to obtain audits impairs independence
B. Whether nonaudit services impair auditor independence
C. The need for a report on internal controls
D. The importance of developing techniques to prevent and detect fraud
Answer:
Steve is deep in debt due to a gambling problem. He is the bookkeeper for a
family-owned business, Cal Poly Greenery. The company has only three employees –
Steve, the husband, and the wife. All three have been friends for many years. One day
the loan shark who lent Steve $20,000 comes knocking at his door asking for repayment
of the loan. Steve convinces the loan shark to give him another day. The following day
Steve writes a check on the company’s books to himself for $20,000. Since he
reconciles the bank accounts and prepares the financial statements, Steve knows it’s
unlikely the owners will ever know about what he has done. From an ethical
perspective, Steve has
A. Violated the trust placed in him by the owners
B. Risked his reputation if the owners find out
C. Compromised his integrity
D. All of these
Answer:
In reference to Rest’s four-component Model of Morality, which component reflects an
individual’s willingness to place ethical values ahead of non-ethical values that relate to
self-interest?
A. Moral Character
B. Moral Motivation
C. Moral Sympathy
D. Moral Judgment
Answer:
The level of care expected of a reasonable person under similar circumstances in
meeting one’s fiduciary duty is called:
A. Duty of loyalty
B. Duty of care
C. Transparency
D. All of these
Answer:
Ethical relativism can best be described as a:
A. Point of view that morality is relative to the norms of one’s culture.
B. Concept that holds that integrity should be maintained in the face of pressure by
others.
C. An ethical reasoning method that holds one should always act out of self-interest.
D. An ethical reasoning method that holds one should always consider the effect of
one’s actions on others.
Answer:
The Committee of Sponsoring Organizations of the Treadway Committee (COSO)
analyzed the financial reporting of public companies during the 1998-2007 periods
when business failures due to accounting fraud were high and found that:
A. Top management was frequently involved in the fraud with the CEO and/or CFO
being the most frequently involved
B. The most common fraud technique involved understating expenses
C. The audit committee always sanctioned the fraud
D. A minority of audit reports issued during the fraud period contained unqualified
audit opinions
Answer:
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
Answer:
An ethical corporate culture can best be established by:
A. Setting a proper tone at the top
B. Establishing strong internal controls
C. Having an effective internal audit function
D. All of these
Answer:
Under a dual board system, the board that carries out management directives for the
benefit of various stakeholder groups is:
A. The Management Board
B. The Supervisory Board
C. The Board of Governors
D. The Board of Trustees
Answer:
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
Answer:
In Thorne’s model of ethical decision making, the instrumental virtues relate to:
A. Moral sensitivity
B. Ethical reasoning
C. Ethical motivation
D. Ethical character
Answer:
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
Answer:
The case that deals with conflicts between management and the board of directors and
the role of family members in various business entities is:
A. Parmalat
B. Satyam
C. Olympus
D. Royal Dutch Shell
Answer:
Diem-Thi Le felt retaliated against for whistle-blowing at the DCAA. Her persistence
and determination to see audits change at DCAA exemplify
A. Moral Character
B. Moral Motivation
C. Moral Judgment
D. Moral Sensitivity
Answer:
The trigger event that led to the disclosure of the scandal at Parmalat was:
A. Almost €4 billion of company funds that were supposed to be held in an account at
Bank of America did not exist
B. The company stuffed the channels with product that it eventually was not purchased
by customers
C. Parmalat officers violated the Foreign Corrupt Practices Act
D. The company sold sour milk
Answer:
The main ethical issue in Healthcare Fraud case is:
A. Maintaining two sets of accounting books.
B. Inflating healthcare costs submitted to Medicare.
C. Outsourcing operations to a firm known for maximizing expense reimbursements.
D. All of these.
Answer:
The Global Survey on Business Ethics reports each of the following results except for:
A. There has been an increase of 10 to 15% in the number of organizations providing
both statements of ethical values and a code of ethics
B. A “tone at the top” is followed in a majority of the companies
C. Just over one-third agree or strongly agree that ethical standards are not fully
monitored
D. There has been an increase in those observing ethical misconduct over the course of
a year
Answer:
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
Answer:
The defendant-auditors in the Anjoorian case argued, in their defense, that:
A. To be found guilty to third parties, the court must find that an accountant had
contemplated a specific transaction for which the financial statement will be used and
that no such transaction was contemplated
B. They had no liability to third party shareholders
C. The plaintiff’s theory of damages is speculative and against public policy
D. All of these
Answer:
Virtue ethics is
A. Doing what is right
B. One’s duty to act in a socially acceptable manner
C. One’s ability to meet or exceed their potential
D. What one ought to do when presented with an ethical dilemma
Answer:
Backdating of stock options is unethical because:
A. It favors top executives over other company employees with respect to the number
of options
B. It purposefully manipulates the option criteria that determine their value
C. It changes the exercise price on options to benefit top executives
D. All of these
Answer:
The revenue recognition issue in the Family Games case is:
A. Whether a company can record revenue before it is signed-off by the lawyers
B. Whether a company can record revenue before it is shipped to the customer
C. Whether a company can record revenue before the revenue recognition rules are met
D. All of these
Answer:
One feature of corporate governance in Germany that makes it stand out when
compared to the U.S. is:
A. A separate audit committee and a board of directors
B. A unitary board of directors system
C. A dual board of directors system
D. Compliance with the Sarbanes-Oxley Act
Answer: