Which of the following is not a mechanism for monitoring a code of ethics?
a. Ethics audit or internal audit procedures
b. Reviews by legal department
c. Awards and bonuses
d. Annual sign-off by employees
e. Employee surveys
Early in 2008, mark-to-market accounting provisions caused the banks to:
a. Revalue their portfolio downwards
b. Be in jeopardy of falling below the regulatory capital requirements
c. Restrict new loans
d. All of the above
e. (a) and (c) only
The primary focus of a compliance-based ethics program is:
a. Preventing, detecting and punishing violations of the law
b. Define organizational values and encourage employee commitment
c. Improve image and relationship with stakeholders
d. Protect management from blame
e. All of the above
An employee in charge of the cash register at a busy restaurant steals small sums of
money at the end of the day whenever the cash in the register exceeds the sum of the
day’s bills. He thinks it is fine to do so because every day there are two or three
costumers that pay more than they should. This type of rationalization is based on:
a. Everyone else is doing it
b. Denial of the victim
c. Condemnation of the condemners
d. Appeal to higher loyalties
e. Entitlement
After SOX, which of the following is not a prohibited non-audit service for external
auditors?
a. Appraisal or valuation services
b. Bookkeeping and other services
c. Legal services
d. Tax services
e. Internal audit outsourcing
As a result of the spectacular stock market crash in 1929, the government implement
the Securities Act of 1933, the Securities Act of 1934, as well as which of the following
acts:
a. Glass-Steagall Act
b. Investment Advisers Act
c. Gramm-Leach-Bliley Act
d. All of the above
e. Only a and b
Most large corporations do not consider these risks in a broad and comprehensive way:
a. Operational risks
b. Reputational risks
c. Credit risks
d. Market risks
e. Ethics risks
Most observers agree that Enron’s problems were caused by:
a. Management’s failure to exercise adequate oversight
b. Failure of the audit committee to exercise adequate oversight
c. Auditor’s lack of independence
d. Deficiencies in audit procedures
e. Failure of the board of directors to exercise adequate oversight
A value that is almost universally respected by stakeholder groups is:
a. Super norm
b. Alfa norm
c. Value norm
d. Hypernorm
e. General norm
These companies are more likely to voluntarily adopt improved governance measures:
a. Larger companies
b. Less profitable companies
c. Foreign companies
d. Smaller companies
e. Private companies
Which of the following is not a characteristic identified by forensic experts in
prospective fraud situations?
a. High intelligence
b. Greed
c. Need for whatever is taken
d. Opportunity to take advantage
e. Low probability of being caught
The following three standards make up the moral standards approach:
a. Utilitarian, Individual rights, and Justice
b. Utilitarian, Individual rights, and Fairness
c. Legal, Individual rights, and Justice
d. Utilitarian, Moral rights, and Justice
e. Legal, Moral rights, and Justice
Which of the following is not one of the 5 questions in Graham Tucker’s original
approach to ethical decision making?
a. Is it profitable
b. Is it right?
c. Is it fair?
d. Is it legal?
e. Does it demonstrate the virtues expected?
Which the following best describes harassment?
a. Improper behaviour considered offensive by the victim, and the perpetrator knows
that this is an offensive behaviour
b. Improper behaviour considered offensive by society in general, and the perpetrator
knows that this is an offensive behaviour
c. Improper behaviour not considered offensive by the victim, and the perpetrator
knows that this is an offensive behaviour
d. Improper behaviour considered offensive by the victim, and the perpetrator does not
know that this is an offensive behaviour
e. Improper behaviour considered not offensive by the victim, and the perpetrator does
not know that this is an offensive behaviour
Which of the following is not a dimension of the COSO Enterprise Risk Framework?
a. Strategic
b. Monitoring
c. Operations
d. Reporting
e. Compliance
Why didn’t investors caught in the Subprime Lending Crisis take earlier note of the
risks inherent in investments known as collateralized debt as obligations (CDOs)?
a. Greed and the desire for high returns.
b. Banks were selling and buying them.
c. Risks were buried in complex, jargon-oriented documents.
d. Risks were diversified over many mortgages.
e. Only three of the above.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was created after the
Subprime Lending fiasco to protect consumers from deceptive practices related to:
a. Mortgages
b. Credit cards
c. Cars
d. Financial derivatives
e. All of the above
Which of the following was not a conflict of interest that Arthur Andersen’s personnel
encountered?
a. Auditing their own work as SPE consultants
b. Losing a very large client
c. A partner reviewed another partner’s work
d. Internal debates about Enron’s questionable accounting treatments were not discussed
with the audit committee
e. Audit staff leaving the firm to work for Enron
The independence of the Enron Board of Directors was compromised by:
a. Family ties between the company and certain board members
b. Employment ties between the company and certain board members
c. Financial ties between the company and certain board members
d. Fiduciary ties between the company and certain board members
e. All of the above
Completing the following steps in this order provides a sound basis for challenging a
proposed decision:
a. Identify facts and stakeholders, rank stakeholders and their interests, and assess the
impact of the proposed action
b. Identify a proper ethical decision framework, rank stakeholders and their interests,
and assess the impact of the proposed action
c. Rank stakeholders and their interests, identify facts and stakeholders, and assess the
impact of the proposed action
d. Identify a proper ethical decision framework, identify facts and stakeholders, and
assess the impact of the proposed action
e. Rank stakeholders and their interests, identify a proper ethical decision framework,
and assess the impact of the proposed action
An employee in charge of counting and depositing cash holdings at end of the day
urgently needs some extra cash to pay her son’s medical bills. Using the fraud triangle,
this situation likely constitutes:
a. Motive
b. Rationalization
c. Opportunity
d. (a) and (b)
e. (a) and (c)
According to former Federal Reserve Chairman Alan Greenspan, the Fed became
concerned about subprime lending in 2000, however:
a. the global demand for mortgage-backed security ended in 2005
b. the quality of mortgage products began to deteriorate in 2005
c. the global demand for mortgage-backed security started in 2003
d. the quality of mortgage products began to deteriorate in 2003
e. the global demand for mortgage-backed security ended in 2008
This theory focuses on the moral character of the decision maker:
a. Deontology
b. Distributive Justice
c. Utilitarianism
d. Moral Imagination
e. Virtue Ethics
Which corporate report discusses subjects that include environmental, health and safety,
philanthropic and other social impacts?
a. Corporate annual report
b. Corporate social responsibility report
c. Corporate quarterly report
d. Corporate stakeholder report
e. Corporate ethics committee report
Which of the following was not a strategy used by Enron to avoid taxes?
a. Deduction of losses twice
b. Shifting depreciable assets to non-depreciable assets
c. Tax deductions for repayment of debt principal
d. Duplication of single economic loss
e. Generation of fees for serving as an accommodation party for another taxpayer
Auditors are mandated to assess the client’s risk of financial reporting fraud. Auditing
standard SAS-99 considers the following a mandatory tool in fraud assessment:
a. Discussion and brainstorming
b. Fraud triangle
c. Interviews with management
d. Development of fraud training programs
e. All of the above
A fundamental problem with Goldman Sachs’ GSAMP Trust, impeding Goldman’s
ability to foreclose on defaulted mortgages was that:
a. Homeowners’ equity in the securitized mortgages was less than 1 percent
b. 40 percent of the securitized loans had little or no documentation
c. Investors relied on Goldman Sachs
d. The underlying assets were second mortgages
e. The mortgages were allocated into thirteen tranches with different risk characteristics
A Ponzi scheme, such as Bernie Madoff ran, is:
a. A card game
b. A sound investment scheme
c. A scheme to improve the environment
d. Hard to hide forever
e. None of the above.
In simple terms, a mortgage-backed security is:
a. A portfolio of mortgages sold to investors through publicly issued bonds
b. A contract that transfers ownership of a lender’s mortgages receivable
c. A contract that transfers the risk of non-collection from mortgage originators to other
investors
d. All of the above
e. (a) and (c) only
If a professional accountant is auditing a public company and she receives company
shares as payment for her audit services, she will be violating the following
fundamental principle:
a. Integrity
b. Objectivity
c. Professional due care
d. Confidentiality
e. All of the above
The following three performance indicators are recommended by the Global Reporting
Initiative:
a. Economic, environmental and organizational
b. Environmental, financial and social
c. Economic, organizational and social
d. Environmental, financial and organizational
e. Cultural, environmental and social
These are character traits that dispose a person to act ethically and thereby make that
person a morally good human being:
a. Norms
b. Moral judgements
c. Virtues
d. Values
e. Ethical judgements
A fundamental problem with Goldman Sachs’ GSAMP Trust was that:
a. Loans were given to people with poor credit histories
b. Homeowners’ equity in the securitized mortgages was less than 1 percent on average
c. Loans were given to people with no income
d. 58 percent of the securitized loans had little or no documentation
e. All of the above