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Chapter 9—Managing and Controlling Ethics Programs
MULTIPLE CHOICE
1. Which of the following does not have a significant impact on the success of an ethics program?
a.
Senior management’s ability to successfully incorporate ethics into the organization
b.
The quality of communication
c.
The size of the company
d.
The content of the company’s code of ethics
e.
The frequency of communication regarding the ethical code and program
2. Which of the following statements about ethics audits is false?
a.
They provide an opportunity to measure conformity to the firm’s desired ethical standards.
b.
Social audits and ethics audits perform basically the same function, so organizations can
use them interchangeably.
c.
They provide an objective method for demonstrating a company’s commitment to
improving strategic planning, including its compliance with legal and ethical standards
and social responsibility.
d.
They can be a component of social audits.
e.
They are systematic evaluations of an organization’s ethics program and performance to
determine whether it is effective.
3. Which of the following is a possible unintended consequence of an organization’s focusing more on
ethics planning than on implementation?
a.
Unethical conduct is viewed as acceptable behavior.
b.
The government implements its own audits.
c.
The ethics program is poorly designed.
d.
Employees become annoyed.
e.
The implementation process incurs large costs for the organization.
4. A(n) _____ is a tool that companies can employ to identify and measure their ethical commitment to
stakeholders.
a.
ethics audit
b.
social audit
c.
financial audit
d.
performance audit
e.
external audit
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5. Which of the following is not a step in the ethics auditing process?
a.
Secure commitment of top executives and directors.
b.
Review organizational mission, goals, values and policies, and define ethical priorities.
c.
Report the results to the U.S. Sentencing Commission.
d.
Collect and analyze relevant information.
e.
Verify the results.
6. Which of the following is a statement that attests that the financial statements made in an audit are
fairly stated, without limitations?
a.
Adverse opinion
b.
Qualified opinion
c.
Unqualified opinion
d.
Favorable opinion
e.
Disclaimer of opinion
7. Under the _____, CEOs and CFOs may be criminally prosecuted if they knowingly certify misleading
financial statements.
a.
Sherman Antitrust Act
b.
Ethical Compliance Act
c.
Robinson-Patman Act
d.
Sarbanes-Oxley Act
e.
Sherman Antitrust Act
8. During which of the following steps of the ethics auditing process does an organization identify the
tools or methods for measuring progress in improving employees’ ethical decisions and conduct?
a.
Secure commitment of top managers and directors
b.
Establish a committee to oversee the audit
c.
Define the scope of the audit
d.
Collect and analyze relevant information
e.
Verify the results
9. Any attempt to verify outcomes and to compare them with standards can be considered a(n) _____
activity, although many smaller firms do not use this word.
a.
ethical
b.
auditing
c.
formal
d.
informal
e.
accounting
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10. _____ are a primary stakeholder group and should be included in the ethics auditing process because
their loyalty determines an organization’s success.
a.
Customers
b.
Employees
c.
Special interest groups
d.
Competitors
e.
Legislators
11. The concept of ethics auditing emerged from the movement to audit and report on companies’ broader
_____ initiatives.
a.
product development
b.
legal compliance
c.
risk management
d.
public relations
e.
social responsibility
12. Which of the following is probably the best way for a manager to provide good ethics leadership?
a.
Hire an ethics officer
b.
Write a code of conduct
c.
Conduct ethics audits
d.
Set a good example
e.
Only hire good employees
13. Which of the following is not a benefit of ethics auditing?
a.
It can improve a firm’s performance and effectiveness.
b.
It can increase a firm’s attractiveness to investors.
c.
It can identify potential risks.
d.
It can harm relationships with stakeholders.
e.
It can reduce the risks associated with misconduct.
14. The word _____ implies a balanced organization that makes ethical financial decisions and also is
ethical in more subjective matters of corporate culture.
a.
compliance
b.
integrity
c.
financial management
d.
corporate culture
e.
transparency
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15. Which of the following is not a measure of ethical climate?
a.
Collective skill
b.
Collective ethical sensitivity
c.
Collective character
d.
Collective judgment
e.
Collective moral motivation
16. During which step of the auditing process should a firm examine all documents that make explicit
commitments to ethical, legal, or social responsibility?
a.
Secure commitment of top managers and directors.
b.
Establish a committee to oversee the audit.
c.
Define the scope of the audit process.
d.
Review organizational mission, goals, values, and policies.
e.
Verify the results.
17. A(n) _____ is a financial accounting firm that offers social auditing services or a nonprofit special
interest group with auditing experience that verifies the results of ethics auditing data analysis
a.
stakeholder
b.
ethics audit consultant
c.
best practices expert
d.
financial consultant
e.
board of directors
18. The process of verifying the results of an audit should involve standard procedures that control the
_____ of the information.
a.
completeness
b.
effectiveness and efficiency
c.
reliability and validity
d.
independence
e.
veracity
19. Which of the following is not one of the top challenges facing CEOs today? .
a.
Keeping pace with regulation
b.
Protecting against risks
c.
Managing and utilizing social media
d.
Gaining adequate compensation
e.
Managing reputation
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20. Two useful indicators for assessing employee issues are
a.
staff turnover and stock price.
b.
staff turnover and employee satisfaction.
c.
staff turnover and honesty.
d.
employee satisfaction and attendance.
e.
employee satisfaction and productivity.
21. At which stage of the ethics auditing process would a hospital conduct focus groups with management,
doctors, nurses, related health professionals, support staff, and patients?
a.
Collect and analyze relevant information
b.
Review organizational mission, goals, values, and policies
c.
Identify stakeholders
d.
Report the results
e.
Verify the results
22. While ideally the board of directors financial audit committee conducts ethics audits, in most firms
they are conducted by
a.
managers or ethics officers.
b.
executive officers.
c.
the CEO.
d.
outside consultants.
e.
secondary stakeholders.
23. Because ethics and social audits are _____, there are few standards that a company can apply with
regard to reporting frequency, disclosure requirements, and remedial actions that it should take in
response to results.
a.
not necessary
b.
expensive
c.
required by law
d.
mandatory
e.
voluntary
24. What are the three Triple Bottom Line factors incorporated into the Global Reporting Initiative
framework?
a.
Economic, social, personal indicators
b.
Political, social, and environmental indicators
c.
Economic, social, and environmental indicators
d.
Political, individual, and environmental indicators
e.
Political, individual, and personal indicators
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25. What should be the first step in the auditing process?
a.
Secure the commitment of top executives and directors
b.
Define the scope of the audit
c.
Establish a committee to oversee the audit
d.
Collect and analyze data
e.
Review organizational mission, goals, values, and policies
26. Retaliation against employees that report misconduct is a problem in _____ cultures.
a.
weak ethical
b.
strong ethical
c.
high power distance
d.
diverse
e.
international
27. Which of the following is not a phase of escalation during an ethical disaster?
a.
The firm’s discovery of the misconduct
b.
Ethical issue recognition
c.
The firm’s response to the misconduct
d.
The decision to act unethically
e.
The firm’s decision to conduct an ethics audit
28. Which of the following is not a technique for collecting evidence during the ethics audit?
a.
Ratio analysis
b.
Observing the data-collection process
c.
Publishing the results of the audit
d.
Examining internal and external documents
e.
Confirming information in the firm’s accounting records
29. _____ is an independent assessment of the quality, accuracy, and completeness of a company’s social
or ethics report.
a.
Publication
b.
Verification
c.
Auditing
d.
Analysis
e.
Validation
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30. What should be the final step in the ethics auditing process?
a.
Define the scope of the audit
b.
Secure the commitment of top managers and directors
c.
Collect and analyze data
d.
Report the findings
e.
Verify the results
31. Ethics audits can help companies identify potential _____ so they can implement plans to eliminate or
reduce them before they reach crisis dimensions.
a.
competitive advantages
b.
risks and liabilities
c.
productivity issues
d.
technological glitches
e.
market opportunities
32. During the data-collection phase of the audit, the primary objective is to generate a variety of opinions
about how the company is perceived and whether it is
a.
fulfilling employee benefits commitments.
b.
bringing in new customers.
c.
meeting profit projections.
d.
meeting earnings projections.
e.
fulfilling stakeholders’ expectations.
33. Independent verification of the ethics audit is important because it lends the report
a.
credibility and formality.
b.
credibility and reliability.
c.
credibility and objectivity.
d.
objectivity and civility.
e.
objectivity and reliability.
34. When The Gap posts the results of its ethics audit on its web site, it is engaged in which of the
following steps of the ethics auditing process?
a.
Submit the results to the U.S. Sentencing Commission
b.
Define the scope of the audit
c.
Collect and analyze relevant information
d.
Verify the results
e.
Report the results
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35. While social reports often discuss issues related to a firm’s performance in the four dimensions of
social responsibility, as well as to specific social responsibility and ethical issues, ethics audits have a
narrower focus on assessing and reporting on a firm’s performance in terms of
a.
ethical and legal conduct.
b.
environmental performance.
c.
financial performance.
d.
customer satisfaction.
e.
ethical misconduct.
ESSAY
36. Compare and contrast ethics auditing and financial auditing. How can the tools of financial auditing be
applied to ethics audits?
37. Explain the benefits and risks of ethics auditing.
38. How can companies secure stakeholder input during an ethics audit? Why is it important to do so?
39. Describe the process of conducting an ethics audit in detail.
40. What is the Global Reporting Initiative? What is its goal? Why has it grown in importance?