File attached...all questions

Chapter 1Multiple Choice Questions ___________________________________________________ 1) Examining the interests of stakeholders is probably required for: a. High short-term profits 2) A value that is almost universally respected by stakeholder groups is: a. Hypernorm 3) Companies attempt to manage the risk of something happening that will have a negative or positive impact on the company's objectives, such as: a. b. c. d. e. Credit risks Litigation risk Reputation risk Ethics risks All of the above ANSWER: e 4) Most large corporations do not consider these risks in a broad and comprehensive way: a. b. c. d. e. Operational risks Reputational risks Credit risks Market risks Ethics risks ANSWER: e 5) The following are examples of ethics risks faced by employees: a. b. c. d. e. Page 1 Honesty and integrity Fairness and compassion Integrity and responsibility Fairness and integrity Responsibility and honesty ANSWER: b 6) Not reporting environmental issues is an example of: a. b. c. d. e. Lack of transparency Lack of integrity Lack of accuracy All of the above None of the above ANSWER: b 7) Incomplete disclosure of the company's revenue recognition policy is an example of: a. b. c. d. e. Lack of transparency Lack of integrity Lack of accuracy All of the above None of the above ANSWER: a 8) This philosophical approach requires that an ethical decision depends upon the duty, rights, and justice involved: a. b. c. d. e. Consequentialism Virtue ethics Duty ethics Righteousness Deontology ANSWER: e 9) The Moral Standards Approach focuses on the following dimensions of the impact of a proposed action: a. b. c. d. e. Net benefit to society, fair to all stakeholders, whether it is right Net benefit to society and whether it is legal Net benefit to society, fair to all stakeholders, whether it is legal Fair to most stakeholders and whether it is right Net benefit to society, fair to most stakeholders, whether it is right ANSWER: a 10) Effective crisis management could represent: Page 2 a. b. c. d. e. An opportunity to avoid costs An opportunity to change employee's perspectives on risk An opportunity to enhance the company's reputation All of the above None of the above ANSWER: c Chapter 2 Multiple Choice Questions _______________________ 11) In order to ensure an investment-grade credit rating, Enron began to emphasize the following three actions: a. b. c. d. e. Reducing accruals, increasing cash flow, and lowering debt Smoothing accruals, increasing cash flow, and lowering debt Increasing cash flow, lowering debt, and smoothing earnings Increasing cash flow, lowering earnings and decreasing option expense Increasing cash flow, lowering debt, and decreasing option expense ANSWER: c 12) At the time of Enron's collapse, the prevailing treatment for employee stock option expense was: a. b. c. d. e. Record stock options only when and if exercised, at exercise price Record all stock options when issued, at exercise price Record all stock options at market price Record stock options only when exercised at market price Record not exercised options at market price ANSWER: a 13) 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 Page 3 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 ANSWER: c 14) Which of the following was not among Arthur Andersen's shortcomings in conducting Enron's audit? a. b. c. d. e. Lack of competence Failure of quality control standards Misunderstanding of auditor's fiduciary role Inconclusive testing of control Insufficient information provided by Enron's staff ANSWER: d 15) In general terms, WorldCom overstated its reported net income by: a. b. c. d. e. Generating false expenses Booking false revenue Capitalizing line costs Amortizing line costs quicker than allowed under GAAP Recognizing future period's revenue ANSWER: c Chapter 3 Multiple Choice Questions _____________________________ 16) This philosopher argued that self-interest motivates people to form peaceful civil societies: a. b. c. d. e. Adam Smith John Locke Thomas Hobbes Jeremy Bentham John Rawls ANSWER: c Page 4 17) Two weaknesses of the following approach are (1) it is difficult to determine who demonstrates integrity in the workplace, and (2) it is difficult to choose between compassion and not betraying somebody's trust: a. b. c. d. e. Deontology Distributive Justice Utilitarianism Moral Imagination Virtue Ethics ANSWER: e 18) This approach presupposes that happiness, utility, pleasure, pain and anguish can be quantified: a. b. c. d. e. Deontology Distributive Justice Utilitarianism Moral Imagination Virtue Ethics ANSWER: c 19) This philosopher argued that social and economic inequalities are just if these inequalities are to everyone's benefit: a. b. c. d. e. Adam Smith John Locke Thomas Hobbes Jeremy Bentham John Rawls ANSWER: e 20) According to distributive justice theory, there are three main criteria for determining the just distribution: a. b. c. d. e. Page 5 Need, fairness, and merit Need, arithmetic equality, and merit Opportunity, fairness, and merit Opportunity, fairness, and arithmetic equality Need, arithmetic equality, and equivalence ANSWER: b Chapter 4 Multiple Choice Questions ______________________________ 21) These costs can be measured indirectly by using costs incurred in similar circumstances or mirror image alternatives: a. b. c. d. e. Surrogates Externalities Future impacts Collateral damages Ethical costs ANSWER: b 22) This approach incorporates the expected future impacts of a decision into the analysis: a. b. c. d. e. Virtue ethics Consequentialism Cost-benefit analysis Risk-benefit analysis All of the above ANSWER: e (I do not understand the difference between Q8 and Q9; when are future impacts not expected in an analysis? I think that Q8 should be deleted; I've added a replacement question at the end.) 23) These values are the combinations of a value and the probability of its occurrence: a. b. c. d. e. Probable values Common values Present values Expected values Risk-adjusted values ANSWER: d 24) 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? Page 6 d. Is it legal? e. Does it demonstrate the virtues expected? ANSWER: e 25) The following three standards make up the moral standards approach: a. b. c. d. e. Utilitarian, Individual rights, and Justice Utilitarian, Individual rights, and Fairness Legal, Individual rights, and Justice Utilitarian, Moral rights, and Justice Legal, Moral rights, and Justice ANSWER: a 26) Pastin's approach adds the following concepts to stakeholder impact analysis: a. b. c. d. e. Rule ethics Ground rule ethics End-point ethics Social contract ethics All of the above ANSWER: e 27) The following approach does not specifically incorporate a thorough review of the motivation for the decisions involved, or the virtues or character traits expected: a. b. c. d. e. 5-question approach Moral standards approach Pastin's approach All of the above (a) and (b) only ANSWER: d 28) Lack of awareness of the following problem results in executives not attributing enough value to the use of an environmental resource: a. b. c. d. e. Commons problem Ethics problem Value problem Risk-assessment problem Moral problem ANSWER: a Page 7 29) If a decision is expected to be unfair to a particular stakeholder group, the decision may be improved by: a. b. c. d. e. Using stakeholder analysis Using a decision making approach Increasing the compensation to that stakeholder group Increasing the compensation to all stakeholder groups All of the above ANSWER: c 30) Which of the following is not an example of a common ethical decision-making pitfall? a. b. c. d. e. Conforming to an unethical corporate culture Focusing only on legalities Conflicts of interests Failure to identify all stakeholder groups None of the above ANSWER: e 31) Failure to identify all relevant stakeholder groups for a proper stakeholder impact analysis may be the result of: a. b. c. d. e. Bias Conforming to an unethical corporate culture Conflicts of interests Failure to consider the motivation for the decision All of the above ANSWER: e 32) 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 Page 8 ANSWER: a 33) Frequently, decision makers have been subject to unreasonable expectations and unrealistic deadlines, this is an example of: a. b. c. d. e. Conforming to an unethical corporate culture Focusing only on legalities Conflicts of interests Failure to identify all stakeholder groups Failure to rank stakeholder interests ANSWER: a Chapter 5 Multiple Choice Questions _________________________________ 34) Corporations are now increasingly realizing that they are accountable: a. b. c. d. e. Legally to shareholders Legally to all stakeholders Strategically to additional stakeholders (a) and (b) (a) and (c) ANSWER: e 35) 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) ANSWER: d 36) Experience has revealed that, to be effective, a code must be reinforced by: a. b. c. d. Page 9 Tone at the top Ethics officer and internal auditors A comprehensive ethical culture Principles, rules and examples e. All of the above ANSWER: e 37) Which of the following is not an ethics risk management principle? a. b. c. d. e. Normal definitions of risk are too narrow for stakeholder accountability Assign responsibility, develop follow-up processes and board review Discovery and remediation are essential The code of ethics must be reviewed by independent parties An ethics risk exists when expectations of stakeholders may not be met ANSWER: d A conflict of interest exists when a given decision maker (D) and another person (P) are in the following situation: 38) a. b. c. d. e. D has to exercise judgement in P's behalf P has to exercise judgement in D's behalf D has a special interest that interferes with proper judgement (a) and (b) (a) and (c) ANSWER: e A potential conflict of interest exists when a given decision maker (D) and another person (P) are in the following situation: 39) a. b. c. d. e. P has a special interest that interferes with proper judgement D may have to exercise judgement in P's behalf D has a special interest that interferes with proper judgement (a) and (b) (b) and (c) ANSWER: e 40) This is the preferred approach to deal with conflicts of interests a. b. c. d. e. Page 10 Management Disclosure Remediation Avoidance Awareness ANSWER: d 41) A fundamental problem examined by agency theory is how it is possible to align: a. b. c. d. e. Shareholders' and stakeholders' goals Manager's and stakeholders' goals Shareholders' and managers' goals Principal's and shareholders' goals Agent's and stakeholders' goals ANSWER: c The 20/60/20 rule states that the total percent of employees who could commit a fraudulent act is: 42) a. b. c. d. e. 20% 60% 80% 100% None of the above ANSWER: b Which of the following is not a characteristic identified by forensic experts in prospective fraud situations? 43) a. b. c. d. e. High intelligence Greed Need for whatever is taken Opportunity to take advantage Low probability of being caught ANSWER: a 44) The primary focus of a compliance-based ethics program is: a. b. c. d. e. Preventing, detecting and punishing violations of the law Define organizational values and encourage employee commitment Improve image and relationship with stakeholders Protect management from blame All of the above ANSWER: a Page 11 45) The primary focus of an integrity-based ethics program is: a. b. c. d. e. Preventing, detecting and punishing violations of the law Define organizational values and encourage employee commitment Improve image and relationship with stakeholders Protect management from blame All of the above ANSWER: b The most important factor in encouraging employee observance to an ethics program is that employees perceive that it is: 46) a. b. c. d. e. Compliance-based Value-based Achievement oriented Stakeholder-based Externally oriented ANSWER: b Building trust within an organization can have favourable impact on employee's willingness to share information and ideas in a process of: 47) a. b. c. d. e. Ethical awareness Ethical awakening Ethical renewal Ethical wave None of the above ANSWER: c A Conference Board survey identified the following rationale for developing codes of ethics: 48) a. b. c. d. e. Make employees aware that adherence is critical to bottom-line success Provide a statement of do's and don'ts Discuss what is expected in stakeholder relationships Establish values and mission All of the above ANSWER: e 49) This code deals with ethics principles plus additional examples: Page 12 a. b. c. d. e. Credo Code of ethics Code of conduct Code of practice All of the above ANSWER: c 50) Which of the following is not a mechanism for monitoring a code of ethics? a. b. c. d. e. Ethics audit or internal audit procedures Reviews by legal department Awards and bonuses Annual sign-off by employees Employee surveys ANSWER: c Which of the following is not an example of emerging public accountability standards or initiatives? 51) a. b. c. d. e. SOX-404 GRI AA-1000 FTSE4Good All of the above ANSWER: e 52) SOX imposed the following new penalties for executives: a. b. c. d. e. Fines Suspension Criminal prosecution for executives Return of ill-gotten gains All of the above ANSWER: c Chapter 6 Multiple Choice Questions ____________________________ Page 13 53) The following elements are essential features of a profession: a. Extensive training, license or certification, and provision of important services to society b. Extensive training, primarily intellectual skills, and representation by professional organizations c. Extensive training, provision of important services to society, and primarily intellectual skills d. License or certification, representation by professional organizations, and autonomy e. License or certification, autonomy, and provision of important services to society ANSWER: c 54) The following value is not necessary for an accounting professional: a. b. c. d. e. Honesty Integrity Objectivity A primary commitment to self-interest All but one of the above ANSWER: d The following duties are essential to maintaining a fiduciary relationship in the accounting profession: 55) a. b. c. d. e. Development and maintenance of required knowledge and skills Maintenance of trust Maintenance of an acceptable personal reputation All of the above (a) and (b) only ANSWER: d 56) Professional Accountants, in their fiduciary role, owe primary loyalty to: a. b. c. d. e. The accounting profession The client The general public Government regulations All of the above ANSWER: c According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a motive for doing right: Page 14 57) a. b. c. d. e. Pre-conventional Conventional Post-conventional Autonomous Principled ANSWER: a According to Kohlberg, at this stage of moral reasoning, adherence to moral codes or to codes of law and order are a motive for doing right: 58) a. b. c. d. e. Pre-conventional Conventional Post-conventional Autonomous Principled ANSWER: b Which of the following is not a fundamental principle in codes of conduct for professional accountants? 59) a. b. c. d. e. Act in the client's best interest Objectivity and independence Maintain the good reputation of the profession Maintain confidentiality Not to be associated with misleading information ANSWER: a If a professional accountant is billing an audit client for more hours than those actually worked, he will be violating the following fundamental principle: 60) a. b. c. d. e. Objectivity Professional due care Integrity Confidentiality All of the above ANSWER: c Page 15 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: 61) a. b. c. d. e. Integrity Objectivity Professional due care Confidentiality All of the above ANSWER: b A professional accountant is auditing client A and providing consulting services to client B. Both clients are in the same industry. If the professional accountant uses specific information from client A's audit to prepare a business plan for client B, he will be violating the following fundamental principle: 62) a. b. c. d. e. Integrity Objectivity Professional due care Confidentiality All of the above ANSWER: d 63) The adoption of the following measures would reduce the expectation gap and lessen public misunderstanding of the auditor's role a. b. c. d. e. Publish a statement of management responsibility Auditor to report annually to audit committee Expand audit report to clarify auditor's role and the level of assurance (a) and (b) (a) and (c) ANSWER: d 64) The recommendation of appointment and review of the external auditors by the audit committee is an example of: a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation b. Safeguards reducing the risk of conflict of interest between an auditor and management c. Safeguards reducing the risk of conflict of interest within a professional accounting firm's own systems and procedures Page 16 d. All of the above e. (a) and (c) only ANSWER: b 65) Using partners who do not report to audit partners for the provision of non-assurance services to an assurance client would be an example of: a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation 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 ANSWER: c 66) 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 ANSWER: c 67) This organization is developing an international code of conduct for professional accountants: a. b. c. d. e. International Accounting Standards Board European Federation of Accountants Financial Accounting Standards Board Public Accounting Oversight Board International Federation of Accountants ANSWER: e This organization issues auditing standards, carries out inspections of public accounting firms auditing U.S. public clients, and imposes sanctions when applicable: 68) a. CPAB b. PCAOB c. SEC Page 17 d. FASB e. AICPA ANSWER: b 69) This organization can issue auditing standards in the U.S.: a. b. c. d. e. AICPA FASB SEC PCAOB All of the above ANSWER: e A professional accounting firm has several audit and tax clients; however, a single client represents 40% of the firm's revenue. This situation could result in the following threat to professional independence: 70) a. b. c. d. e. Self-review Intimidation Advocacy Familiarity Over-dependence ANSWER: e A professional accountant has been the partner in charge of a particular audit client for the past eight years. This situation could result in the following threat to professional independence: 71) a. b. c. d. e. Self-review Intimidation Advocacy Familiarity None of the above ANSWER: d A new audit client was taken on by a professional accountant's firm. The fee for this client's audit engagement is significantly lower than that charged by the prior accountants. This situation could result in the following threat to professional independence: 72) a. Self-review Page 18 b. c. d. e. Intimidation Advocacy Familiarity None of the above ANSWER: e Chapter 7 Multiple Choice Questions ____________________________ The following duties are essential to maintaining a fiduciary relationship in the accounting profession: 73) a. b. c. d. e. Development and maintenance of required knowledge and skills Maintenance of trust Maintenance of an acceptable personal reputation All of the above (a) and (b) only ANSWER: d According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a motive for doing right: 74) a. b. c. d. e. Pre-conventional Conventional Post-conventional Autonomous Principled ANSWER: a According to Kohlberg, at this stage of moral reasoning, adherence to moral codes or to codes of law and order are a motive for doing right: 75) a. b. c. d. e. Pre-conventional Conventional Post-conventional Autonomous Principled ANSWER: b Page 19 Which of the following is not a fundamental principle in codes of conduct for professional accountants? 76) a. b. c. d. e. Act in the client's best interest Objectivity and independence Maintain the good reputation of the profession Maintain confidentiality Not to be associated with misleading information ANSWER: a If a professional accountant is billing an audit client for more hours than those actually worked, he will be violating the following fundamental principle: 77) a. b. c. d. e. Objectivity Professional due care Integrity Confidentiality All of the above ANSWER: c 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: 78) a. b. c. d. e. Integrity Objectivity Professional due care Confidentiality All of the above ANSWER: b A professional accountant is auditing client A and providing consulting services to client B. Both clients are in the same industry. If the professional accountant uses specific information from client A's audit to prepare a business plan for client B, he will be violating the following fundamental principle: 79) a. b. c. d. e. Page 20 Integrity Objectivity Professional due care Confidentiality All of the above ANSWER: d 80) The adoption of the following measures would reduce the expectation gap and lessen public misunderstanding of the auditor's role a. b. c. d. e. Publish a statement of management responsibility Auditor to report annually to audit committee Expand audit report to clarify auditor's role and the level of assurance (a) and (b) (a) and (c) ANSWER: d 81) The recommendation of appointment and review of the external auditors by the audit committee is an example of: a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation b. Safeguards reducing the risk of conflict of interest between an auditor and management c. Safeguards reducing the risk of conflict of interest within a professional accounting firm's own systems and procedures d. All of the above e. (a) and (c) only ANSWER: b 82) Using partners who do not report to audit partners for the provision of non-assurance services to an assurance client would be an example of: a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation 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 ANSWER: c 83) 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 Page 21 c. Safeguards reducing the risk of conflict of interest within a professional accounting firm d. All of the above e. (a) and (c) only Page 22 Fall 2014 -Final for Ethics 1340 Name_________________________________________________ Multiple choice = 75 points 1) A professional accountant is auditing client A and providing consulting services to client B. Both clients are in the same industry. If the professional accountant uses specific information from client A's audit to prepare a business plan for client B, he will be violating the following fundamental principle: a. b. c. d. e. Integrity Objectivity Professional due care Confidentiality All of the above 2) Corporations are now increasingly realizing that they are accountable: a. b. c. d. e. Legally to shareholders Legally to all stakeholders Strategically to additional stakeholders (a) and (b) (a) and (c) 3) The first resource for guidance when a businessperson or a professional accountant faces an ethical problem should be: a. b. c. d. e. Commonly accepted social norms Corporate and professional codes of conduct Ethical decision-making frameworks Commonly accepted philosophical approaches All of the above 4) The adoption of the following measures would reduce the expectation gap and lessen public misunderstanding of the auditor's role a. b. c. d. e. Publish a statement of management responsibility Auditor to report annually to audit committee Expand audit report to clarify auditor's role and the level of assurance (a) and (b) (a) and (c) 1Final - Ethics 1340-LSC Tomball 5) 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) 6) The recommendation of appointment and review of the external auditors by the audit committee is an example of: a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation b. Safeguards reducing the risk of conflict of interest between an auditor and management c. Safeguards reducing the risk of conflict of interest within a professional accounting firm's own systems and procedures d. All of the above e. (a) and (c) only 7) The AACSB Ethics Education taskforce has called for business students to be familiar with the following approaches to ethical decision making: a. b. c. d. e. Consequentialism, deontology, and virtue ethics Consequentialism, deontology, and moral imagination Distributive justice, deontology, and virtue ethics Distributive justice, deontology, and moral imagination Consequentialism, deontology, and distributive justice 8) These are character traits that dispose a person to act ethically and thereby make that person a morally good human being: a. b. c. d. e. Norms Moral judgements Virtues Values Ethical judgements 9) Using partners who do not report to audit partners for the provision of non-assurance services to an assurance client would be an example of: a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation 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 2Final - Ethics 1340-LSC Tomball 10) Which of the following is not true? a. Principles are more useful than rules because principles can be interpreted as new circumstances require b. Rules are more useful than principles because rules can be interpreted as new circumstances require c. A blend of principles and rules is often optimal d. All of the above e. (a) and (c) only 11) Experience has revealed that, to be effective, a code must be reinforced by: a. b. c. d. e. Tone at the top Ethics officer and internal auditors A comprehensive ethical culture Principles, rules and examples All of the above 12) The external review of an audit firm's quality control system is an example of: a. b. c. d. e. Safeguards reducing the risk of conflict of interest within the audit profession Safeguards reducing the risk of conflict of interest within a client Safeguards reducing the risk of conflict of interest within a professional accounting firm All of the above (a) and (c) only 13) From a stakeholder point of view, which of the following must be satisfied for a decision to be considered ethical? a. The decision should demonstrate virtues reasonabley expected b. The decision should result in more benefits than costs c. The decision should not offend the rights of any other stakeholders d. The distribution of benefits and burdens should be fair e. All of the above must be satisfied for a decision to be considered ethical 14) This organization is developing an international code of conduct for professional accountants: a. b. c. d. e. International Accounting Standards Board European Federation of Accountants Financial Accounting Standards Board Public Accounting Oversight Board International Federation of Accountants 3Final - Ethics 1340-LSC Tomball 15) This organization issues auditing standards, carries out inspections of public accounting firms auditing U.S. public clients, and imposes sanctions when applicable: a. b. c. d. e. CPAB PCAOB SEC FASB AICPA 16) The costs of environmental clean-ups absorbed by downstream individuals, companies, or municipalities are referred to as: a. b. c. d. e. Surrogates Externalities Future impacts Collateral damages Ethical costs 17) Which of the following is not an ethics risk management principle? a. b. c. d. e. Normal definitions of risk are too narrow for stakeholder accountability Assign responsibility, develop follow-up processes and board review Discovery and remediation are essential The code of ethics must be reviewed by independent parties An ethics risk exists when expectations of stakeholders may not be met 18) A conflict of interest exists when a given decision maker (D) and another person (P) are in the following situation: a. b. c. d. e. D has to exercise judgement in P's behalf P has to exercise judgement in D's behalf D has a special interest that interferes with proper judgement (a) and (b) (a) and (c) 19) This organization can issue auditing standards in the U.S.: a. b. c. d. e. AICPA FASB SEC PCAOB All of the above 4Final - Ethics 1340-LSC Tomball 20) A professional accounting firm has several audit and tax clients; however, a single client represents 40% of the firm's revenue. This situation could result in the following threat to professional independence: a. b. c. d. e. Self-review Intimidation Advocacy Familiarity Over-dependence 21) These costs can be measured indirectly by using costs incurred in similar circumstances or mirror image alternatives: a. b. c. d. e. Surrogates Externalities Future impacts Collateral damages Ethical costs 22) What is the most common measure of shareholder well-being: a. b. c. d. e. Profit or loss Profit or loss plus externalities Profit or loss plus cost-benefit analysis Profit or loss plus risk-benefit analysis All of the above 23) Which of the following is not a stakeholder right? a. Life, heath and safety b. To earn a reasonable return on an investment c. Freedom of speech d. Fair treatment before the law e. All of the above are stakeholder rights 24) A professional accountant has been the partner in charge of a particular audit client for the past eight years. This situation could result in the following threat to professional independence: a. b. c. d. e. Self-review Intimidation Advocacy Familiarity None of the above 5Final - Ethics 1340-LSC Tomball 25) A new audit client was taken on by a professional accountant's firm. The fee for this client's audit engagement is significantly lower than that charged by the prior accountants. This situation could result in the following threat to professional independence: a. b. c. d. e. Self-review Intimidation Advocacy Familiarity None of the above 26) This approach incorporates the expected future impacts of a decision into the analysis: a. b. c. d. e. Virtue ethics Consequentialism Cost-benefit analysis Risk-benefit analysis All of the above 27) A potential conflict of interest exists when a given decision maker (D) and another person (P) are in the following situation: a. b. c. d. e. P has a special interest that interferes with proper judgement D may have to exercise judgement in P's behalf D has a special interest that interferes with proper judgement (a) and (b) (b) and (c) 28) This is the preferred approach to deal with conflicts of interests a. b. c. d. e. Management Disclosure Remediation Avoidance Awareness 29) A fundamental problem examined by agency theory is how it is possible to align: a. b. c. d. e. Shareholders' and stakeholders' goals Manager's and stakeholders' goals Shareholders' and managers' goals Principal's and shareholders' goals Agent's and stakeholders' goals 6Final - Ethics 1340-LSC Tomball 30) These values are the combinations of a value and the probability of its occurrence: a. b. c. d. e. Probable values Common values Present values Expected values Risk-adjusted values 31) Which of the following is not one of the 5 questions in Graham Tucker's original approach to ethical decision making? a. b. c. d. e. Is it profitable Is it right? Is it fair? Is it legal? Does it demonstrate the virtues expected? 32) The 20/60/20 rule states that the total percent of employees who could commit a fraudulent act is: a. b. c. d. e. 20% 60% 80% 100% None of the above 33) Which of the following is not a characteristic identified by forensic experts in prospective fraud situations? a. b. c. d. e. High intelligence Greed Need for whatever is taken Opportunity to take advantage Low probability of being caught 34) 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. b. c. d. e. Integrity Objectivity Professional due care Confidentiality All of the above 7Final - Ethics 1340-LSC Tomball 35) The primary focus of a compliance-based ethics program is: a. b. c. d. e. Preventing, detecting and punishing violations of the law Define organizational values and encourage employee commitment Improve image and relationship with stakeholders Protect management from blame All of the above 36) The following three standards make up the moral standards approach: a. b. c. d. e. Utilitarian, Individual rights, and Justice Utilitarian, Individual rights, and Fairness Legal, Individual rights, and Justice Utilitarian, Moral rights, and Justice Legal, Moral rights, and Justice 37) If a professional accountant is billing an audit client for more hours than those actually worked, he will be violating the following fundamental principle: a. b. c. d. e. Objectivity Professional due care Integrity Confidentiality All of the above 38) Pastin's approach adds the following concepts to stakeholder impact analysis: a. b. c. d. e. Rule ethics Ground rule ethics End-point ethics Social contract ethics All of the above 39) The following approach does not specifically incorporate a thorough review of the motivation for the decisions involved, or the virtues or character traits expected: a. b. c. d. e. 5-question approach Moral standards approach Pastin's approach All of the above (a) and (b) only 8Final - Ethics 1340-LSC Tomball 40) Lack of awareness of the following problem results in executives not attributing enough value to the use of an environmental resource: a. b. c. d. e. Commons problem Ethics problem Value problem Risk-assessment problem Moral problem 41) Which of the following is not a fundamental principle in codes of conduct for professional accountants? a. b. c. d. e. Act in the client's best interest Objectivity and independence Maintain the good reputation of the profession Maintain confidentiality Not to be associated with misleading information 42) The primary focus of an integrity-based ethics program is: a. b. c. d. e. Preventing, detecting and punishing violations of the law Define organizational values and encourage employee commitment Improve image and relationship with stakeholders Protect management from blame All of the above 43) The most important factor in encouraging employee observance to an ethics program is that employees perceive that it is: a. b. c. d. e. Compliance-based Value-based Achievement oriented Stakeholder-based Externally oriented 44) According to Kohlberg, at this stage of moral reasoning, adherence to moral codes or to codes of law and order are a motive for doing right: a. b. c. d. e. Pre-conventional Conventional Post-conventional Autonomous Principled 9Final - Ethics 1340-LSC Tomball 45) If a decision is expected to be unfair to a particular stakeholder group, the decision may be improved by: a. b. c. d. e. Using stakeholder analysis Using a decision making approach Increasing the compensation to that stakeholder group Increasing the compensation to all stakeholder groups All of the above 46) Which of the following is not an example of a common ethical decision-making pitfall? a. b. c. d. e. Conforming to an unethical corporate culture Focusing only on legalities Conflicts of interests Failure to identify all stakeholder groups None of the above 47) Building trust within an organization can have favourable impact on employee's willingness to share information and ideas in a process of: a. b. c. d. e. Ethical awareness Ethical awakening Ethical renewal Ethical wave None of the above 48) A Conference Board survey identified the following rationale for developing codes of ethics: a. b. c. d. e. Make employees aware that adherence is critical to bottom-line success Provide a statement of do's and don'ts Discuss what is expected in stakeholder relationships Establish values and mission All of the above 49) This code deals with ethics principles plus additional examples: a. b. c. d. e. Credo Code of ethics Code of conduct Code of practice All of the above 50) Professional Accountants, in their fiduciary role, owe primary loyalty to: a. b. c. d. e. The accounting profession The client The general public Government regulations All of the above 10Final - Ethics 1340-LSC Tomball 51) According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a motive for doing right: a. b. c. d. e. Pre-conventional Conventional Post-conventional Autonomous Principled 52) Failure to identify all relevant stakeholder groups for a proper stakeholder impact analysis may be the result of: a. b. c. d. e. Bias Conforming to an unethical corporate culture Conflicts of interests Failure to consider the motivation for the decision All of the above 53) The following duties are essential to maintaining a fiduciary relationship in the accounting profession: a. b. c. d. e. Development and maintenance of required knowledge and skills Maintenance of trust Maintenance of an acceptable personal reputation All of the above (a) and (b) only 54) 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 55) Which of the following is not a mechanism for monitoring a code of ethics? a. b. c. d. e. Ethics audit or internal audit procedures Reviews by legal department Awards and bonuses Annual sign-off by employees Employee surveys 11Final - Ethics 1340-LSC Tomball 56) The following value is not necessary for an accounting professional: a. b. c. d. e. Honesty Integrity Objectivity A primary commitment to self-interest All but one of the above 57) Which of the following is not an example of emerging public accountability standards or initiatives? a. b. c. d. e. SOX-404 GRI AA-1000 FTSE4Good All of the above 58) SOX imposed the following new penalties for executives: a. b. c. d. e. Fines Suspension Criminal prosecution for executives Return of ill-gotten gains All of the above 59) The following elements are essential features of a profession: a. Extensive training, license or certification, and provision of important services to society b. Extensive training, primarily intellectual skills, and representation by professional organizations c. Extensive training, provision of important services to society, and primarily intellectual skills d. License or certification, representation by professional organizations, and autonomy e. License or certification, autonomy, and provision of important services to society 60) Frequently, decision makers have been subject to unreasonable expectations and unrealistic deadlines, this is an example of: a. b. c. d. e. Conforming to an unethical corporate culture Focusing only on legalities Conflicts of interests Failure to identify all stakeholder groups Failure to rank stakeholder interests 12Final - Ethics 1340-LSC Tomball Essay: Identify three things that you would advise a first year accountant regarding ethics. 10 points (Please elaborate each point). 13Final - Ethics 1340-LSC Tomball What did you learn about this class? and How will this class help you in the future? 15 points (one page) 14Final - Ethics 1340-LSC Tomball Fall 2014 -Final for Ethics 1340 Name_________________________________________________ Multiple choice = 75 points 1) A professional accountant is auditing client A and providing consulting services to client B. Both clients are in the same industry. If the professional accountant uses specific information from client A's audit to prepare a business plan for client B, he will be violating the following fundamental principle: a. b. c. d. e. Integrity Objectivity Professional due care Confidentiality All of the above 2) Corporations are now increasingly realizing that they are accountable: a. b. c. d. e. Legally to shareholders Legally to all stakeholders Strategically to additional stakeholders (a) and (b) (a) and (c) 3) The first resource for guidance when a businessperson or a professional accountant faces an ethical problem should be: a. b. c. d. e. Commonly accepted social norms Corporate and professional codes of conduct Ethical decision-making frameworks Commonly accepted philosophical approaches All of the above 4) The adoption of the following measures would reduce the expectation gap and lessen public misunderstanding of the auditor's role a. b. c. d. e. Publish a statement of management responsibility Auditor to report annually to audit committee Expand audit report to clarify auditor's role and the level of assurance (a) and (b) (a) and (c) 1Final - Ethics 1340-LSC Tomball 5) 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) 6) The recommendation of appointment and review of the external auditors by the audit committee is an example of: a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation b. Safeguards reducing the risk of conflict of interest between an auditor and management c. Safeguards reducing the risk of conflict of interest within a professional accounting firm's own systems and procedures d. All of the above e. (a) and (c) only 7) The AACSB Ethics Education taskforce has called for business students to be familiar with the following approaches to ethical decision making: a. b. c. d. e. Consequentialism, deontology, and virtue ethics Consequentialism, deontology, and moral imagination Distributive justice, deontology, and virtue ethics Distributive justice, deontology, and moral imagination Consequentialism, deontology, and distributive justice 8) These are character traits that dispose a person to act ethically and thereby make that person a morally good human being: a. b. c. d. e. Norms Moral judgements Virtues Values Ethical judgements 9) Using partners who do not report to audit partners for the provision of non-assurance services to an assurance client would be an example of: a. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation 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 2Final - Ethics 1340-LSC Tomball 10) Which of the following is not true? a. Principles are more useful than rules because principles can be interpreted as new circumstances require b. Rules are more useful than principles because rules can be interpreted as new circumstances require c. A blend of principles and rules is often optimal d. All of the above e. (a) and (c) only 11) Experience has revealed that, to be effective, a code must be reinforced by: a. b. c. d. e. Tone at the top Ethics officer and internal auditors A comprehensive ethical culture Principles, rules and examples All of the above 12) The external review of an audit firm's quality control system is an example of: a. b. c. d. e. Safeguards reducing the risk of conflict of interest within the audit profession Safeguards reducing the risk of conflict of interest within a client Safeguards reducing the risk of conflict of interest within a professional accounting firm All of the above (a) and (c) only 13) From a stakeholder point of view, which of the following must be satisfied for a decision to be considered ethical? a. The decision should demonstrate virtues reasonabley expected b. The decision should result in more benefits than costs c. The decision should not offend the rights of any other stakeholders d. The distribution of benefits and burdens should be fair e. All of the above must be satisfied for a decision to be considered ethical 14) This organization is developing an international code of conduct for professional accountants: a. b. c. d. e. International Accounting Standards Board European Federation of Accountants Financial Accounting Standards Board Public Accounting Oversight Board International Federation of Accountants 3Final - Ethics 1340-LSC Tomball 15) This organization issues auditing standards, carries out inspections of public accounting firms auditing U.S. public clients, and imposes sanctions when applicable: a. b. c. d. e. CPAB PCAOB SEC FASB AICPA 16) The costs of environmental clean-ups absorbed by downstream individuals, companies, or municipalities are referred to as: a. b. c. d. e. Surrogates Externalities Future impacts Collateral damages Ethical costs 17) Which of the following is not an ethics risk management principle? a. b. c. d. e. Normal definitions of risk are too narrow for stakeholder accountability Assign responsibility, develop follow-up processes and board review Discovery and remediation are essential The code of ethics must be reviewed by independent parties An ethics risk exists when expectations of stakeholders may not be met 18) A conflict of interest exists when a given decision maker (D) and another person (P) are in the following situation: a. b. c. d. e. D has to exercise judgement in P's behalf P has to exercise judgement in D's behalf D has a special interest that interferes with proper judgement (a) and (b) (a) and (c) 19) This organization can issue auditing standards in the U.S.: a. b. c. d. e. AICPA FASB SEC PCAOB All of the above 4Final - Ethics 1340-LSC Tomball 20) A professional accounting firm has several audit and tax clients; however, a single client represents 40% of the firm's revenue. This situation could result in the following threat to professional independence: a. b. c. d. e. Self-review Intimidation Advocacy Familiarity Over-dependence 21) These costs can be measured indirectly by using costs incurred in similar circumstances or mirror image alternatives: a. b. c. d. e. Surrogates Externalities Future impacts Collateral damages Ethical costs 22) What is the most common measure of shareholder well-being: a. b. c. d. e. Profit or loss Profit or loss plus externalities Profit or loss plus cost-benefit analysis Profit or loss plus risk-benefit analysis All of the above 23) Which of the following is not a stakeholder right? a. Life, heath and safety b. To earn a reasonable return on an investment c. Freedom of speech d. Fair treatment before the law e. All of the above are stakeholder rights 24) A professional accountant has been the partner in charge of a particular audit client for the past eight years. This situation could result in the following threat to professional independence: a. b. c. d. e. Self-review Intimidation Advocacy Familiarity None of the above 5Final - Ethics 1340-LSC Tomball 25) A new audit client was taken on by a professional accountant's firm. The fee for this client's audit engagement is significantly lower than that charged by the prior accountants. This situation could result in the following threat to professional independence: a. b. c. d. e. Self-review Intimidation Advocacy Familiarity None of the above 26) This approach incorporates the expected future impacts of a decision into the analysis: a. b. c. d. e. Virtue ethics Consequentialism Cost-benefit analysis Risk-benefit analysis All of the above 27) A potential conflict of interest exists when a given decision maker (D) and another person (P) are in the following situation: a. b. c. d. e. P has a special interest that interferes with proper judgement D may have to exercise judgement in P's behalf D has a special interest that interferes with proper judgement (a) and (b) (b) and (c) 28) This is the preferred approach to deal with conflicts of interests a. b. c. d. e. Management Disclosure Remediation Avoidance Awareness 29) A fundamental problem examined by agency theory is how it is possible to align: a. b. c. d. e. Shareholders' and stakeholders' goals Manager's and stakeholders' goals Shareholders' and managers' goals Principal's and shareholders' goals Agent's and stakeholders' goals 6Final - Ethics 1340-LSC Tomball 30) These values are the combinations of a value and the probability of its occurrence: a. b. c. d. e. Probable values Common values Present values Expected values Risk-adjusted values 31) Which of the following is not one of the 5 questions in Graham Tucker's original approach to ethical decision making? a. b. c. d. e. Is it profitable Is it right? Is it fair? Is it legal? Does it demonstrate the virtues expected? 32) The 20/60/20 rule states that the total percent of employees who could commit a fraudulent act is: a. b. c. d. e. 20% 60% 80% 100% None of the above 33) Which of the following is not a characteristic identified by forensic experts in prospective fraud situations? a. b. c. d. e. High intelligence Greed Need for whatever is taken Opportunity to take advantage Low probability of being caught 34) 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. b. c. d. e. Integrity Objectivity Professional due care Confidentiality All of the above 7Final - Ethics 1340-LSC Tomball 35) The primary focus of a compliance-based ethics program is: a. b. c. d. e. Preventing, detecting and punishing violations of the law Define organizational values and encourage employee commitment Improve image and relationship with stakeholders Protect management from blame All of the above 36) The following three standards make up the moral standards approach: a. b. c. d. e. Utilitarian, Individual rights, and Justice Utilitarian, Individual rights, and Fairness Legal, Individual rights, and Justice Utilitarian, Moral rights, and Justice Legal, Moral rights, and Justice 37) If a professional accountant is billing an audit client for more hours than those actually worked, he will be violating the following fundamental principle: a. b. c. d. e. Objectivity Professional due care Integrity Confidentiality All of the above 38) Pastin's approach adds the following concepts to stakeholder impact analysis: a. b. c. d. e. Rule ethics Ground rule ethics End-point ethics Social contract ethics All of the above 39) The following approach does not specifically incorporate a thorough review of the motivation for the decisions involved, or the virtues or character traits expected: a. b. c. d. e. 5-question approach Moral standards approach Pastin's approach All of the above (a) and (b) only 8Final - Ethics 1340-LSC Tomball 40) Lack of awareness of the following problem results in executives not attributing enough value to the use of an environmental resource: a. b. c. d. e. Commons problem Ethics problem Value problem Risk-assessment problem Moral problem 41) Which of the following is not a fundamental principle in codes of conduct for professional accountants? a. b. c. d. e. Act in the client's best interest Objectivity and independence Maintain the good reputation of the profession Maintain confidentiality Not to be associated with misleading information 42) The primary focus of an integrity-based ethics program is: a. b. c. d. e. Preventing, detecting and punishing violations of the law Define organizational values and encourage employee commitment Improve image and relationship with stakeholders Protect management from blame All of the above 43) The most important factor in encouraging employee observance to an ethics program is that employees perceive that it is: a. b. c. d. e. Compliance-based Value-based Achievement oriented Stakeholder-based Externally oriented 44) According to Kohlberg, at this stage of moral reasoning, adherence to moral codes or to codes of law and order are a motive for doing right: a. b. c. d. e. Pre-conventional Conventional Post-conventional Autonomous Principled 9Final - Ethics 1340-LSC Tomball 45) If a decision is expected to be unfair to a particular stakeholder group, the decision may be improved by: a. b. c. d. e. Using stakeholder analysis Using a decision making approach Increasing the compensation to that stakeholder group Increasing the compensation to all stakeholder groups All of the above 46) Which of the following is not an example of a common ethical decision-making pitfall? a. b. c. d. e. Conforming to an unethical corporate culture Focusing only on legalities Conflicts of interests Failure to identify all stakeholder groups None of the above 47) Building trust within an organization can have favourable impact on employee's willingness to share information and ideas in a process of: a. b. c. d. e. Ethical awareness Ethical awakening Ethical renewal Ethical wave None of the above 48) A Conference Board survey identified the following rationale for developing codes of ethics: a. b. c. d. e. Make employees aware that adherence is critical to bottom-line success Provide a statement of do's and don'ts Discuss what is expected in stakeholder relationships Establish values and mission All of the above 49) This code deals with ethics principles plus additional examples: a. b. c. d. e. Credo Code of ethics Code of conduct Code of practice All of the above 50) Professional Accountants, in their fiduciary role, owe primary loyalty to: a. b. c. d. e. The accounting profession The client The general public Government regulations All of the above 10Final - Ethics 1340-LSC Tomball 51) According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a motive for doing right: a. b. c. d. e. Pre-conventional Conventional Post-conventional Autonomous Principled 52) Failure to identify all relevant stakeholder groups for a proper stakeholder impact analysis may be the result of: a. b. c. d. e. Bias Conforming to an unethical corporate culture Conflicts of interests Failure to consider the motivation for the decision All of the above 53) The following duties are essential to maintaining a fiduciary relationship in the accounting profession: a. b. c. d. e. Development and maintenance of required knowledge and skills Maintenance of trust Maintenance of an acceptable personal reputation All of the above (a) and (b) only 54) 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 55) Which of the following is not a mechanism for monitoring a code of ethics? a. b. c. d. e. Ethics audit or internal audit procedures Reviews by legal department Awards and bonuses Annual sign-off by employees Employee surveys 11Final - Ethics 1340-LSC Tomball 56) The following value is not necessary for an accounting professional: a. b. c. d. e. Honesty Integrity Objectivity A primary commitment to self-interest All but one of the above 57) Which of the following is not an example of emerging public accountability standards or initiatives? a. b. c. d. e. SOX-404 GRI AA-1000 FTSE4Good All of the above 58) SOX imposed the following new penalties for executives: a. b. c. d. e. Fines Suspension Criminal prosecution for executives Return of ill-gotten gains All of the above 59) The following elements are essential features of a profession: a. Extensive training, license or certification, and provision of important services to society b. Extensive training, primarily intellectual skills, and representation by professional organizations c. Extensive training, provision of important services to society, and primarily intellectual skills d. License or certification, representation by professional organizations, and autonomy e. License or certification, autonomy, and provision of important services to society 60) Frequently, decision makers have been subject to unreasonable expectations and unrealistic deadlines, this is an example of: a. b. c. d. e. Conforming to an unethical corporate culture Focusing only on legalities Conflicts of interests Failure to identify all stakeholder groups Failure to rank stakeholder interests 12Final - Ethics 1340-LSC Tomball Essay: Identify three things that you would advise a first year accountant regarding ethics. 10 points (Please elaborate each point). 13Final - Ethics 1340-LSC Tomball What did you learn about this class? and How will this class help you in the future? 15 points (one page) 14Final - Ethics 1340-LSC Tomball