The external review of an audit firm’s quality control system is an example of:
a. Safeguards reducing the risk of conflict of interest within the audit profession
b. Safeguards reducing the risk of conflict of interest within a client
c. Safeguards reducing the risk of conflict of interest within a professional accounting
firm
d. All of the above
e. (a) and (c) only
A fundamental problem examined by agency theory is how it is possible to align:
a. Shareholders’ and stakeholders’ goals
b. Manager’s and stakeholders’ goals
c. Shareholders’ and managers’ goals
d. Principal’s and shareholders’ goals
e. Agent’s and stakeholders’ goals
This approach focuses on coming up with an innovative solution to an ethical dilemma:
a. Deontology
b. Distributive Justice
c. Utilitarianism
d. Moral Imagination
e. Virtue Ethics
Building trust within an organization can have favourable impact on employee’s
willingness to share information and ideas in a process of:
a. Ethical awareness
b. Ethical awakening
c. Ethical renewal
d. Ethical wave
e. None of the above
The 20/60/20 rule states that the total percent of employees who could commit a
fraudulent act is:
a. 20%
b. 60%
c. 80%
d. 100%
e. None of the above
This theory is concerned with the motivation of the decision maker rather than the
consequences of the decision:
a. Deontology
b. Distributive Justice
c. Utilitarianism
d. Moral Imagination
e. Virtue Ethics
This theory argues that the best ethical alternative is the one that will produce the
greatest amount of happiness to the largest number of stakeholders:
a. Deontology
b. Distributive Justice
c. Utilitarianism
d. Moral Imagination
e. Virtue Ethics
In 1984, Edward Freemen published an article on stakeholder theory. Which of the
following is not true?
a. A firm needs the support of its stakeholders to enhance the firm’s reputation.
b. Stakeholder theory took years to mature.
c. Stakeholder theory is not a useful framework for those interested in governance.
d. Firms need stakeholders to achieve their corporate objectives.
e. Stakeholder theory occurred at the same time as the rise in social and corporate
activism.
Goldman Sachs’ GSAMP Trust was able to create AAA rated securities by:
a. Separating the mortgage portfolio into tranches and assigning the tranches to share
risks of default equally.
b. Not disclosing the risks clearly
c. Guaranteeing or protecting some tranches
d. Separating the mortgage portfolio into tranches and designating the A-1, A-2, and
A-3 tranches last in order, after the M-1 to M-7 and B-1 to B-3 tranches, to suffer losses
if a default occurred
e. All of the above
Which of the following is not covered under the Sarbanes-Oxley Act of 2002 (SOX)?
a. The responsibilities of shareholders
b. The responsibilities of the board of directors
c. The responsibilities of management
d. The responsibilities of auditors
e. Conflicts of interest
This organization issues auditing standards, carries out inspections of public accounting
firms auditing U.S. public clients, and imposes sanctions when applicable:
a. CPAB
b. PCAOB
c. SEC
d. FASB
e. AICPA
There are two aspect of justice, but under this aspect there should be a consistent
application of law:
a. Distributive justice
b. Procedural justice
c. Balance of justice
d. Deontology
e. Teleology
Ethical dilemmas arise when:
a. Norms and values are in conflict
b. There is only one alternative course of action available
c. Norms and values are not in conflict
d. There are several theories of ethical decision making
e. All of the above
Experience has revealed that, to be effective, a code must be reinforced by:
a. Tone at the top
b. Ethics officer and internal auditors
c. A comprehensive ethical culture
d. Principles, rules and examples
e. All of the above
Rating agencies were exposed to a conflict of interest because:
a. Credit rating agencies were rating securities and investing in those securities
b. Credit rating agencies used ratings to sell securities
c. Clients of the credit rating agencies used ratings to sell securities
d. Investors do not want rating downgrades
e. Credit rating agencies were paid by the firms who created the securities being rated
What is the most common measure of shareholder well-being:
a. Profit or loss
b. Profit or loss plus externalities
c. Profit or loss plus cost-benefit analysis
d. Profit or loss plus risk-benefit analysis
e. All of the above
The company’s internal auditors and the Ethics Officer should report:
a. Day-to-day to the CEO
b. Day-to-day to the Audit Committee of the Board of Directors
c. Regularly to the Audit Committee of the Board of Directors without management
being present
d. (a) and (c)
e. (a) and (b)