which of the following is not an ethics risk management principle?

Exam 3 Possible Test Question Multiple Choice Questions Chapter 5 Corporate Ethical Governance & Accountability 1) 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) 2) 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) 3) 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 4) 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 5) 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 6) A conflict of interest exists when a given decision maker (D) and another person (P) are in the following situation: a. D has to exercise judgement on P's behalf b. P has to exercise judgement on D's behalf c. D has a special interest that interferes with proper judgement d. (a) and (b) Page 1 of 7 e. (a) and (c) 7) 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) 8) This is the preferred approach to deal with conflicts of interests a. b. c. d. e. Management Disclosure Remediation Avoidance Awareness 9) 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 10) 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 11) 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 12) 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 Page 2 of 7 13) 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 14) 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 15) Building trust within an organization can have favorable impact on an 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 16) 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 17) 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 18) 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 Page 3 of 7 19) 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 are examples 20) 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 Chapter 6 Professional Accounting in the Public Interest, Post Enron 21) 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 22) 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 23) 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 24) 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 Page 4 of 7 25) 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 26) 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 27) 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 28) 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. Objectivity b. Professional due care c. Integrity d. Confidentiality e. All of the above 29) 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 30) 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 Page 5 of 7 31) 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) 32) 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 33) 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 34) 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 35) 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 Page 6 of 7 36) 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 37) This organization can issue auditing standards in the U.S.: a. b. c. d. e. AICPA FASB SEC PCAOB All of the above 38) 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 39) 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 40) 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 Page 7 of 7