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1. Character traits associated with ethical leadership include: a. Integrity b. Honesty c. Trustworthiness d. All of the above Answer D: All of the above 2. In the interview process questions that are not related to the person’s ability to do the job should be avoided, including questions regarding the following subjects: a. Marital status b. Age c. Religion d. All of the above Answer D: All of the above 3. In general terms, the duties expected of a professional are the maintenance of what five terms? a. Doubt, objectivity, competence, expectations, and virtue b. Security, integrity, competence, expectations, and judgment c. Objectivity, integrity, competence, confidentiality, and discipline d. Due care, honesty, planning, fiduciary duty, and ethical conflict resolution Answer: c. Objectivity, integrity, competence, confidentiality, and discipline 4. Due to financial scandals in 2002, the United State Federal Legislature created what Board? a. Sarbanes-Oxley b. PCAOB c. AICPA d. TSBPA Answer: b. PCAOB

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Good Governance

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1. Character traits associated with ethical leadership include:

a. Integrityb. Honestyc. Trustworthinessd. All of the above

Answer D: All of the above

2. In the interview process questions that are not related to the person’s ability to do the job should be avoided, including questions regarding the following subjects:

a. Marital statusb. Agec. Religiond. All of the above

Answer D: All of the above

3. In general terms, the duties expected of a professional are the maintenance of what five terms?

a. Doubt, objectivity, competence, expectations, and virtueb. Security, integrity, competence, expectations, and judgmentc. Objectivity, integrity, competence, confidentiality, and disciplined. Due care, honesty, planning, fiduciary duty, and ethical conflict resolution

Answer: c. Objectivity, integrity, competence, confidentiality, and discipline

4. Due to financial scandals in 2002, the United State Federal Legislature created what Board?

a. Sarbanes-Oxleyb. PCAOBc. AICPAd. TSBPA

Answer: b. PCAOB

5. According to the Senate Subcommittee that investigated Enron, the duties of the Board of Directors of a listed company include

a. reviewing the listed company’s overall business strategyb. selecting and compensating the listed company’s senior executivesc. evaluating the listed company’s outside auditord. overseeing the preparation of the listed company’s financial statementse. all of the above

Answer: E. all of the above

6. Which cultural value is more typically associated with Japan?

a. Personal Rights

b. Obligation to Saviorc. Obligation to companyd. Religious Values

Answer: c. Obligation to company

7. Which of the following is not an essential feature of a profession according to the Brooks text?

a. Extensive trainingb. Provision of important services to societyc. High compensationd. training and skills largely intellectual in nature

Answer: d. training and skills largely intellectual in nature

8. What are considered core values of the accounting profession?

a. Integrityb. Objectivity, based upon independent judgmentc. Confidentialityd. Competencee. All the above

Answer: e. All the above

9. Of the following, which is the most important aspect of a corporate ethics culture?

a. Formal Ethics Codeb. Ethics Credoc. Ethics Communicationd. Ethical leadership by executives commonly called “tone at the top”

Answer: d. Ethical leadership by executives commonly called “tone at the top”

10. Corporations expect that a professional accountant in its employ will perform fiduciary duties with which of the following qualities?

a. Competenceb. Integrityc. Confidentialityd. Objectivitye. All of the above

Answer: e. All of the above

11. Key decisions driving hiring and firing decisions should be based upon:

a. Marital Statusb. National Origin and Racec. Aged. Religione. Job performance and ability to do the job

Answer: e. Job performance and ability to do the job

12. Facilitating payments as defined by the FCPA are problematic because the payments

a. Add to the cost of doing businessb. Undermine merit based purchasingc. Risk possible negative consequences from competing stakeholdersd. All of the above

Answer: d. All of the above

13. Directors and executives have found that support of stakeholders is essential to the optimal achievement of 

a. Medium-term corporate objectivesb. Long-term corporate objectivesc. Short-term corporate objectivesd. All of the abovee. a and b

Answer: b. Long-term corporate objectives

14. According to Kohlberg, this is the stage where moral individuals develop a principled conscience and adhere to moral and social codes because the codes are the moral principles that guide society.

a. Firstb. Middlec. Fifthd. Sixthe. All the above

Answer: c. Fifth (In Stage five (social contract driven), the world is viewed as holding different opinions, rights and values. Such perspectives should be mutually respected as unique to each person or community. Laws are regarded as social contracts rather than rigid edicts. Those that do not promote the general welfare should be changed when necessary to meet “the greatest good for the greatest number of people”)

15. General Values found in the majority of Professional Codes of Ethics that Accountants are to follow include

a. Professional competenceb. Due professional carec. Proper supervisiond. All of the abovee. None of the above

Answer: d. All of the above

16. Behavior that is uncivil does not include:

a. Slamming doorsb. Profanity

c. Throwing objectsd. None of the above

Answer: d. None of the above

17. A conflict of interest occurs when:

a. The defense against influences is managed to ensure that all employees are aware of the existence and consequences.b. When the independent judgment of a person is swayed, or might be swayed, from making decisions in the best interest of others who are relying on the judgment.c. Guidelines prove helpful to specify when it may be acceptable to give or accept a gift or preferential treatment.d. All of the above.e. None of the above.

Answer: b. When the independent judgment of a person is swayed, or might be swayed, from making decisions in the best interest of others who are relying on the judgment.

18. Expectations for behavior of professional accountants are and will be embodied in:

a. Court decisionsb. Commonly understood standards of practicec. Research studies and articlesd. Regulator’s guidelinese. All of the above

Answer: e. All of the above

19. Which of the following are the rationalizations of unethical actions according to Joseph Heath?

a. Denial of responsibilityb. Denial of injuryc. Appeal to higher loyaltiesd. Denial by the victime. All of the above

20. A typical board of directors’ duties includes all of the following except:

a. Reviewing the company’s overall business strategyb. Evaluating the company’s outside auditorc. Overseeing the day-to-day activities of the companyd. Monitoring company performance

Answer: c. Overseeing the day-to-day activities of the company

21. Which of the following factors is not considered by the U.S. Department of Justice when deciding when to prosecute directors with non-compliance with SOX requirements?

a. Whether the compliance program is substantive or just a paper shamb. If there is staff sufficient to monitor and audit the compliance programc. Whether management is enforcing the program

d. The size of the public company and its related ability to implement the programe. All of the above

Answer: d. The size of the public company and its related ability to implement the program

22. Professional accountants are best suited to play the dominant or supporting roles in design, preparation and management of a variety of areas that are vital to corporate governance including all of the following except:

a. Ethical corporate cultureb. Stakeholder interests assessmentc. Tax planningd. Ethics rick management systems

Answer: c. Tax planning

23.The following matters make up the fraud triangle except

a. Knowledge or capabilityb. Motivec. Rationalizationd. Opportunity

Answer: a. Knowledge or capability

24. Under state laws, directors should act in good faith and in the best interest of the corporation and its shareholders. Courts generally discuss a number of different types of fiduciary obligations. Select out of the following the answer(s) that would best describe the director’s fiduciary obligations.

a. The duty of obedience requires a director to avoid committing beyond the scope of the powers of a corporation as defined by its charterb. The duty of loyalty dictates that a director must not allow his personal interest to prevail over the interests of the corporationc. The duty of care requires a director to be diligent and prudent in managing the corporation’s affairsd. All  of the above

Answer: d. All  of the above

25.Which of the following is not a guideline for acceptance of gifts or preferential treatment discussed in the Brooks’ text?

a. What is the FMV?b. Is it nominal or substantial?c. Is it legal?d. What are the circumstances?e. What is the company’s policy?

Answer: a. What is the FMV?

26. The professional accountant should be dedicated to serving the public interest. To achieve this the IFAC Code of Ethics for Professional Accountants indicates compliance with 5 fundamental principles. These five principles are

a. Objectivity, Independence, Professional Behavior, Integrity, and Due Careb. Objectivity, Reliability, Professional Appearance, Integrity, and Independence of Mindc. Integrity, Objectivity, Professional Behavior, Competence, and Confidentialityd. None of the above

Answer: c. Integrity, Objectivity, Professional Behavior, Competence, and Confidentiality

27. Which of the following is a false statement concerning Circular 230 lists of best practices?

a. Cash IRS checks on behalf of clientsb. Provide the highest level of quality, professional care, acting fairly, and with integrityc. Avoid conflicts of interest when representing more than one clientd. Not advise the client to take a patently improper or frivolous position

Answer: a. Cash IRS checks on behalf of clients

28.Which of the following is an element in the fraud triangle?

a. Motiveb. Rationalizationc. Opportunityd. All of the above

Answer: d. All of the above

29. Which of the following is a false statement?

a. Conflict of interests have been a subject of extreme importance in recent scandals in which employees, agents and professionals failed to exercise proper judgment on behalf of their principals.b. A conflict of interest occurs when the independent judgment of a person is swayed, or might be swayed, from making decisions in the best interest of others who are relying on that judgment.c. A professional accountant is expected to make judgments that are in the public interest.d. An executive is not expected to make judgments in the best interest of the company.

Answer:  d. An executive is not expected to make judgments in the best interest of the company.

30. In Maslow’s Hierarchy of Needs, which of the following is a physical need?

a. Fulfillmentb. Affinityc. Safetyd. Self-actualization

Answer b. Affinity (SEX ??)  he suggested that people first need to satisfy their basic physiological needs — food, shelter, sleep, sex, etc. Once these requirements have been secured then safety needs (protection, physical security, resources, job security, income, etc.) 

31. To remedy the concerns over a conflict of interest, which general approaches should be considered? 

a. Disclosure to those stakeholders relying on the decisionb. Management of the conflict of interest so that benefits of the judgment made are greater than the costs

c. Avoidanced. All of the above

Answer: d. All of the above

________________________________________________________________________

32.      Corporations are now increasingly realizing that they are accountable:

a.       Legally to shareholdersb.      Legally to all stakeholdersc.       Strategically to additional stakeholdersd.      (a) and (b)e.       (a) and (c)

Answer: c.       Strategically to additional stakeholders

33.   The company’s internal auditors and the Ethics Officer should report:a.       Day-to-day to the CEOb.      Day-to-day to the Audit Committee of the Board of Directorsc.       Regularly to the Audit Committee of the Board of Directors without management being presentd.      (a) and (c)e.       (a) and (b)

Answer: c. Regularly to the Audit Committee of the Board of Directors without management being present

34.      Which of the following is not true?a.       Principles are more useful than rules because principles can be interpreted as new circumstances

requireb.      Rules are more useful than principles because rules can be interpreted as new circumstances requirec.       A blend of principles and rules is often optimald.      All of the abovee.       (a) and (c) only

Answer:   Principles are more useful than rules because principles can be interpreted as new circumstances require.

35.      Experience has revealed that, to be effective, a code must be reinforced by:

a.       Tone at the topb.      Ethics officer and internal auditorsc.       A comprehensive ethical cultured.      Principles, rules and examplese.       All of the above

Answer: e.       All of the above

36.      Which of the following is not an ethics risk management principle?

a.       Normal definitions of risk are too narrow for stakeholder accountabilityb.      Assign responsibility, develop follow-up processes and board reviewc.       Discovery and remediation are essentiald.      The code of ethics must be reviewed by independent partiese.       An ethics risk exists when expectations of stakeholders may not be met

Answer: a. Normal definitions of risk are too narrow for stakeholder accountability

37.      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 in P’s behalfb.      P has to exercise judgement in D’s behalfc.       D has a special interest that interferes with proper judgementd.      (a) and (b)e.       (a) and (c)

Answer: e.       (a) and (c)

38.      A potential conflict of interest exists when a given decision maker (D) and another person (P) are in the following situation:

a.       P has a special interest that interferes with proper judgementb.      D may have to exercise judgement in P’s behalfc.       D has a special interest that interferes with proper judgementd.      (a) and (b)e.       (b) and (c)

Answer :b.      D may have to exercise judgement in P’s behalf

39.     This is the preferred approach to deal with conflicts of interests

a.       Managementb.      Disclosurec.       Remediationd.      Avoidancee.       Awareness

Answer: d.      Avoidance

40.      A fundamental problem examined by agency theory is how it is possible to align:

a.       Shareholders’ and stakeholders’ goalsb.      Manager’s and stakeholders’ goalsc.       Shareholders’ and managers’ goalsd.      Principal’s and shareholders’ goalse.       Agent’s and stakeholders’ goals

Answer: c.  Shareholders’ and managers’ goals

41. 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

Answer: a. 20%

42.  Which of the following is not a characteristic identified by forensic experts in prospective fraud situations?

a.       High intelligenceb.      Greedc.       Need for whatever is takend.      Opportunity to take advantagee.       Low probability of being caught 

Answer: c.   Need for whatever is taken

43.  The primary focus of a compliance-based ethics program is:

a.       Preventing, detecting and punishing violations of the lawb.      Define organizational values and encourage employee commitmentc.       Improve image and relationship with stakeholdersd.      Protect management from blamee.       All of the above

Answer: a. Preventing, detecting and punishing violations of the law

44.  The primary focus of an integrity-based ethics program is:

a.       Preventing, detecting and punishing violations of the lawb.      Define organizational values and encourage employee commitmentc.       Improve image and relationship with stakeholdersd.      Protect management from blamee.       All of the above

Answer: b. Define organizational values and encourage employee commitment

45.   The most important factor in encouraging employee observance to an ethics program is that employees perceive that it is:

1. Compliance-based2. Value-based3. Achievement oriented4. Stakeholder-based5. Externally oriented

Answer: b: Value

46.)  Building trust within an organization can have favorable impact on employee’s willingness to share information and ideas in a process of:

a.       Ethical awarenessb.      Ethical awakeningc.       Ethical renewald.      Ethical wave e.       None of the above

Answer: 

47.  A Conference Board survey identified the following rationale for developing codes of ethics:

a.       Make employees aware that adherence is critical to bottom-line successb.      Provide a statement of do’s and don’tsc.       Discuss what is expected in stakeholder relationshipsd.      Establish values and missione.       All of the above

Answer: e. All of the above

48.  This code deals with ethics principles plus additional examples:

a.       Credob.      Code of ethicsc.       Code of conductd.      Code of practicee.       All of the above

      Answer: 

49.  Which of the following is not a mechanism for monitoring a code of ethics?

a.       Ethics audit or internal audit proceduresb.      Reviews by legal departmentc.       Awards and bonusesd.      Annual sign-off by employeese.       Employee surveys

50.  Which of the following is not an example of emerging public accountability standards or initiatives?

a.       SOX-404b.      GRIc.       AA-1000d.      FTSE4Goode.       All of the above

Answer: a.  SOX-404

51. SOX imposed the following new penalties for executives:

a.       Finesb.      Suspensionc.       Criminal prosecution for executivesd.      Return of ill-gotten gainse.       All of the above

Answer: e. All of the above

52.  The following elements are essential features of a profession:

a.       Extensive training, license or certification, and provision of important services to societyb.      Extensive training, primarily intellectual skills, and representation by professional organizationsc.       Extensive training, provision of important services to society, and primarily intellectual skillsd.      License or certification, representation by professional organizations, and autonomye.       License or certification, autonomy, and provision of important services to society

Answer: a.       Extensive training, license or certification, and provision of important services to society

53.  The following values not necessary for an accounting professional:

a.       Honestyb.      Integrityc.       Objectivityd.      A primary commitment to self-intereste.       All but one of the above

Answer: d.A primary commitment to self-interest

54.  The following duties are essential to maintaining a fiduciary relationship in the accounting profession:

a.       Development and maintenance of required knowledge and skillsb.      Maintenance of trustc.       Maintenance of an acceptable personal reputationd.      All of the abovee.       (a) and (b) only

Answer: e.   (a) and (b) only

55.  Professional Accountants, in their fiduciary role, owe primary loyalty to:

a.       The accounting professionb.      The clientc.       The general publicd.      Government regulationse.       All of the above

Answer: c.The general public

56. According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a motive for doing right:

a.       Pre-conventionalb.      Conventionalc.       Post-conventionald.      Autonomouse.       Principled

Answer: a.       Pre-conventional

57. 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.       Pre-conventionalb.      Conventionalc.       Post-conventionald.      Autonomouse.       Principled

Answer: b.      Conventional

58. Which of the following is not a fundamental principle in codes of conduct for professional accountants?

a.       Act in the client’s best interestb.      Objectivity and independencec.       Maintain the good reputation of the professiond.      Maintain confidentialitye.       Not to be associated with misleading information

Answer: a.       Act in the client’s best interest

59.  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.       Objectivityb.      Professional due carec.       Integrityd.      Confidentialitye.       All of the above

Answer: c. Integrity

60.  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.       Integrityb.      Objectivityc.       Professional due care

d.      Confidentialitye.       All of the above

Answer: b.      Objectivity

61.  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.       Integrityb.      Objectivityc.       Professional due cared.      Confidentialitye.       All of the above

Answer: d.  Confidentiality

62.  The adoption of the following measures would reduce the expectation gap and lessen public misunderstanding of the auditor's role

a.       Publish a statement of management responsibilityb.      Auditor to report annually to audit committeec.       Expand audit report to clarify auditor's role and the level of assuranced.      (a) and (b)e.       (a) and (c)

Answer: e.  (a) and (c)

63.  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 regulationb.      Safeguards reducing the risk of conflict of interest between an auditor and managementc.       Safeguards reducing the risk of conflict of interest within a professional accounting firm’s own systems

and proceduresd.      All of the abovee.       (a) and (c) only

Answer: b. Safeguards reducing the risk of conflict of interest between an auditor and management

64.  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 regulationb.      Safeguards reducing the risk of conflict of interest within a clientc.       Safeguards reducing the risk of conflict of interest within a professional accounting firmd.      All of the abovee.       (a) and (c) only

Answer" c.       Safeguards reducing the risk of conflict of interest within a professional accounting firm

65.  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 professionb.      Safeguards reducing the risk of conflict of interest within a clientc.       Safeguards reducing the risk of conflict of interest within a professional accounting firmd.      All of the abovee.       (a) and (c) only

66.  This organization is developing an international code of conduct for professional accountants:a.       International Accounting Standards Boardb.      European Federation of Accountantsc.       Financial Accounting Standards Boardd.      Public Accounting Oversight Boarde.       International Federation of Accountants

Answer: e.       International Federation of Accountants

67.  This organization issues auditing standards, carries out inspections of public accounting firms auditing U.S. public clients, and imposes sanctions when applicable:

a.       CPABb.      PCAOBc.       SECd.      FASBe.       AICPA

Answer: b  PCAOB

68.  This organization can issue auditing standards in the U.S.:

a.       AICPAb.      FASBc.       SECd.      PCAOBe.       All of the above

Answer: a.       AICPA

69.  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.       Self-reviewb.      Intimidationc.       Advocacyd.      Familiaritye.       Over-dependence

Answer: E

70.  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.       Self-reviewb.      Intimidationc.       Advocacyd.      Familiaritye.       None of the above

Answer: d

71.  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.       Self-reviewb.      Intimidationc.       Advocacyd.      Familiaritye.       None of the above

Answer: b.      Intimidation

72.  Which of the following is not a dimension of the COSO Enterprise Risk Framework?

a.       Strategicb.      Monitoringc.       Operationsd.      Reportinge.       Compliance

73.  Which of the following is not a component of the COSO Enterprise Risk Framework?

a.       Risk assessmentb.      Risk reviewc.       Internal environmentd.      Information and communicatione.       Control activities.

Answer: b.      Risk review

74.  Ethics and ethical corporate culture should likely play a vital role in setting:

a.       Control environmentb.      Risk assessmentc.       Information and communicationd.      Monitoringe.       Control activities

Answer: a.       Control environment

75.  Which of the following is a source of risk identified by both the AICPA/CICA and the Institute of Internal Auditors:

a.       Environmentalb.      Informationalc.       Financiald.      Operationale.       All of the above

Answer: e.       All of the above

76. What is the recommended strategy when stakeholders’ potential for threat is HIGH and the stakeholders’ potential for cooperation is HIGH?

a.       Monitorb.      Involvec.       Discussd.      Defende.       None of the above

Answer: e.       None of the above (Collaborate)

77.  What is the recommended strategy when stakeholders’ potential for threat is LOW and the stakeholders’ potential for cooperation is HIGH?

a.       Monitorb.      Involvec.       Discussd.      Defende.       None of the above

Answer: b.      Involve

78.  The following three performance indicators are recommended by the Global Reporting Initiative:

a.       Economic, environmental and organizationalb.      Environmental, financial and socialc.       Economic, organizational and sociald.      Environmental, financial and organizationale.       Cultural, environmental and social

Answer:  a.       Economic, environmental and organizational : NOT sure .. GRI web indicate three categories: (G3.1’s Performance Indicators are organized into categories: Economic, Environment and Social. The Social category is broken down further by Labor, Human Rights, Society and Product Responsibility sub-categories.)

79.  The following performance component recommended by the Global Reporting Initiative relates to customer health and safety, marketing communications and customer privacy:

a.       Labor practicesb.      Human rightsc.       Product responsibilityd.      Society

e.       Costumer rights

Answer: b.      Human rights ???

80.  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 brainstormingb.      Fraud trianglec.       Interviews with managementd.      Development of fraud training programse.       All of the above

Answer: e.       All of the above

 81.  Which of the following would be the least useful report of ethics risks and opportunities?

a.       By hypernorm valueb.      By shareholder groupc.       By product or serviced.      By corporate objectivee.       By reputation driver

Answer: b. By shareholder group

82.Which the following best describes harassment?

a.       Improper behavior considered offensive by the victim, and the perpetrator knows that this is an offensive behavior

b.      Improper behavior considered offensive by society in general, and the perpetrator knows that this is an offensive behavior

c.       Improper behavior not considered offensive by the victim, and the perpetrator knows that this is an offensive behavior

d.      Improper behavior considered offensive by the victim, and the perpetrator does not know that this is an offensive behavior

e.       Improper behavior considered not offensive by the victim, and the perpetrator does not know that this is an offensive behavior

Answer: b.      Improper behavior considered offensive by society in general, and the perpetrator knows that this is an offensive behavior

83. 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.       Motiveb.      Rationalizationc.       Opportunityd.      (a) and (b)

e.       (a) and (c) 

Answer: e.       (a) and (c)

84.  An employee in charge of the costumer service help line needs urgently some extra cash for paying his son’s hospital bills. Using the fraud triangle, this situation likely constitutes:

a.       Motiveb.      Rationalizationc.       Opportunityd.      (a) and (b)e.       (a) and (c)

85.  An employee who thinks he is being treated unfairly because he is regularly working unpaid overtime, urgently needs some extra cash. Using the fraud triangle, this situation likely constitutes:

a.       Motiveb.      Rationalizationc.       Opportunityd.      (a) and (b)e.       (a) and (c) 

Answer: d.      (a) and (b)

86.  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 itb.      Denial of the victimc.       Condemnation of the condemnersd.      Appeal to higher loyaltiese.       Entitlement

Answer: b.      Denial of the victim

87. An employee in charge of writing checks to suppliers in a manufacturing firm steals small sums of money every month by writing himself a check for the total of the discounts he negotiates with the company’s suppliers. This type of rationalization is based on:

a.       Denial of responsibilityb.      Denial of the victimc.       Condemnation of the condemnersd.      Everyone else is doing ite.       Entitlement

Answer: e.       Entitlement

88.  An employee in charge of collecting tickets at the entrance of a movie theater lets her friends enter the theater without paying for tickets. She thinks it is fine to do so because the employees at the popcorn bar give free popcorn to their friends. This type of rationalization is because:

a.       Denial of responsibilityb.      Denial of the victimc.       Everyone else is doing itd.      Appeal to higher loyaltiese.       Entitlement

Answer: c.       Everyone else is doing it

89.  The following need is at the top of Maslow’s Hierarchy of Needs:

a.       Esteemb.      Respectc.       Fulfillmentd.      Safetye.       Affinity

Answer : d.      Safety  (Psychological, Safety, Love/Belonging,  Esteem and Self Actualization)

90.  An important difference between anticipated and unanticipated crises is that:

a.       Unanticipated crises are easier to control than anticipated crisesb.      Unanticipated crises have a less negative reputational impact than anticipated crisesc.       Anticipated crises start much earlier than unanticipated crisesd.      Anticipated crises are less costly than unanticipated crisese.       Anticipated crises have a longer uncontrolled period than unanticipated crises

91.  Most of the damage is usually done in this phase of a crisis:

a.       Pre-crisisb.      Reputation restorationc.       Controlledd.      Uncontrollede.       Post-crisis

92. Which of the following would hinder an organizations code of conduct from functioning properly?

A.        Lack of top management endorsing and supporting the code.B.         An effective internal control systemC.         Empowering employees ethically to make ethical decisionsD.        Having a “due diligence defense” for directors and officersE.         All of the above.

93.   A properly functioning ethical code is essential to the following except:a- The development and maintenance of an ethical corporate culture.

            b- An effective internal control system.            c- A due diligence defense for directors and officers.            d- Sending proper signal to external stakeholders.            E- All of the above are results of a proper functioning code.

94.   To maintain good client relationship, an auditor must do all of the following except:a- Define work to be done in fee agreement, if appropriate, provide reasonable estimates of costs.            b- Utilize staff and office automation to provide cost effectiveness and efficient service.            c- Bill periodically and often, rather than allowing fees to accumulate.            d- Generally decline accepting other telephone calls when in conference with the client.            e- All of the above should be done to maintain good client relationship.

95.  Forensic experts point out that in most instances of fraud or opportunistic behavior, they begin to identify prospective perpetrators through the use of what theory?

a)      SINGb)      Chinese Wallc)      GONEd)      20/60/20

96.  Forensic experts point out that in most instances of fraud or opportunistic behavior, they can begin to identify prospective perpetrators through the use of the GONE Theory.  The acronym, GONE, stands for circumstances that account for motivation of illicit behavior.  What does GONE stand for?

A.     G-GreedB.     O-Opportunity to take advantageC.     N-Need for whatever is takenD.     E-Expectation of being caught is lowE.      All of the above

97.  To remedy the concerns over a conflict of interest, three general approaches should be considereda.  Avoidanceb.  Disclosure to the those stake holders relying upon the decisionc.  Management of the conflict of interest so that the benefits of the judgment made outweigh the costs.d.  All of the above

98.  Hypernorms involve the demonstration of the following basic values: Honesty, Fairness, Compassion, Integrity, Predictability and Responsibility.a.  Trueb.  False

99.  Which of the following is necessary to maintain good client relations?a.  Have written fee agreements.

b.  Complete work on time or when promised.c.  Bill periodically and often, rather than allowing fees to accumulate.d.  All of the above.

100.  According to the Texas Public Accounting Act Rules regarding Form of Practice, a certificate or registration holder may practice public accountancy only in the following business organizations:

a.  Proprietorshipb.  Partnershipc.  LLCd.  Corporation

e.  All of the above

101.  According to 7216 IRS Code, a CPA can disclose confidential client information if he received:a.         court orderb.         administrative summons from IRSc.         written consent from the clientd.         All of the above

102.  What does the government expect of individuals licensed as a CPA:

a.  Competence in performing services.b.  Objectivity in the offering of services.c.  Integrity in client dealings.d.  All of the above.e.  None of the above.

103. According to rule 501.52 for the rules of professional conduct, “Professional services” or “Professional accounting work” includes which of the following:

a. Issuing reports or financial statementsb. Providing management or financial advisory or consulting servicesc. Preparing tax returnsd. All of the abovee. Only A & B

104.       Which of the following are considered reportable events under the Texas Public Accountancy Act?

a.         The cancellation, revocation or suspension of a driver’s license related to a Driving While Intoxicated related offense

b.         A felonyc.         A crime of moral turpituded.         B & Ce.         All of the above

105. In general, the duties expected of a professional CPA are the maintenance of which of the following:

a. Competenceb. Objectivityc. Integrity

d. All of the above.

106. Which of the following are considered to represent deficiencies in professional codes of conduct:

(a)    Consultation on ethical matters is not uniformly encouraged, and may require the hiring of outside counsel rather than counseling through the professional association.

(b)   A fair reporting/hearing process is not always indicated, so members are uncertain whether to come forward.

(c)    Protection is not offered to a whistle blower.(d)   Sanctions are often unclear and their applicability is not defined.(e)    All of the above.

107. Independence of mind is the state of mind that permits the provision of an opinion without being affected by influences that compromise professional judgment, allowing an individual to act with integrity, and exercise objectivity and professional skepticism.

(a)    True(b)   False

108.                                      - the state of mind that permits the provision of an opinion without being affected by influences that compromise professional judgment, allowing an individual to act with integrity, and exercise objectivity and professional skepticism.

a.       Attention Deficit Disorder or A.D.D.b.      Obsessive Compulsive Disorder or O.C.D.c.       Independence of mind or I.O.M.d.      Post-traumatic Stress Disorder or P.T.S.D.e.       None of the above

109. To maintain good client relationship, an auditor must do all of the following except:

            a. Define work to be done in fee agreement, if appropriate, provide reasonable estimates of costs.            b. Utilize staff and office automation to provide cost effectiveness and efficient service.            c. Bill periodically and often, rather than allowing fees to accumulate.            d. Generally decline accepting other telephone calls when in conference with the client.            e. All of the above should be done to maintain good client relationship.

110.  The proper discharge of the ethical values of competence, integrity, honesty, and objectivity relies substantially, if not primarily, upon

a.  The personal moral values of the Board of Directors involved.b.  The personal ethical values of the professional accountant involved.c.  The importance of the values addedd.  The ethical values of the employees

111.  A CPA's independence would not be considered to be impaired by which of the following:

a. The CPA has a financial interest in the client.b. The CPA has a close relative who holds a key position with the client.c. The CPA had breakfast with the client that morning.d. All of the above.

112.  Attest Service means:

a.         An audit or other engagement required by the Board to be performed in accordance with the auditing standards adopted by the American Institute of Certified Public Accountants or another national accountancy organization recognized by the Board.

b.         A review, compilation or other engagement required by the Board to be formed in accordance with standards for accounting and review services adopted by the American Institute of Certified Public Accountants or another national accountancy organization recognized by the Board.

c.         An engagement required by the Board to be preformed in accordance with standard for attestation engagements adopted by the American Institute of Certified Public Accountants or another national accountancy organization recognized by the Board; or

d.         Any of the assurance service required by the Board to be performed in accordance with professional standards adopted by the American Institute of Certified Public Accountants or another national accountancy organization recognized by the Board.

e.         All of the above.

113. When implementing an ethical culture, all items below are important aspects to be considered in such culture EXCEPT:

A.        Ethical leadership by executive and supervisors.

B.         Organizational focus that stresses care for employees and the community.

C.         Rigid corporate structure where employees are shielded from management.

D.        Perceived fairness, fair treatment of employees.

114.       The 20/60/20 Rule regarding division of the general population into three groups states that:

a.  20% of people would never commit fraud.b. 60% of people would seek to commit fraud depending on circumstances.c. 20% of people would seek to commit fraud.d. Managers underestimate associates and employees unethical behavior.e. All of the above

115. An ethical culture combines formal and informal elements to guide employees thought and action, including the following:

a. Ethical leadership by executives and supervisorsb. Reward systems to incorporate ethical considerationsc. Perceived fairness, fair treatment of employeesd. All of the abovee. None of the above.

116.       The Brooks text identified 3 threats to good governance and accountability.  Those 3 threats are:

a.       Misunderstanding management and company duties; Failure to identify and manage work; and Lack of interest.

b.   Failure to manage people and familial duties; Misunderstanding SOX; and Lack of codes of conduct.

a.  Misunderstanding employees’ objectives; Failure to identify the board of directors; and Co-worker conflicts.

b.   Misunderstanding objectives and fiduciary duty; Failure to identify and manage ethics risks; and Conflicts of interest.

117.   Which of the following would hinder an organizations code of conduct from functioning properly?

a.         Lack of top management endorsing and supporting the code.b.         An effective internal control systemc.         Empowering employees ethically to make ethical decisionsd.         Having a Adue diligence defense@ for directors and officerse.         All of the above.

118.     Why is an engagement letter so important to prepare prior to beginning new work?

a. It clearly defines expectations so that there are no surprises at the end of the job.b. If the client requires specialized expertise, the CPA can advise the client of any outside

resources    he will utilize during the engagement.c. It will lay out the billing guidelines (i.e., pay in advance, monthly retainer, etc.) so that there

are no    surprises after work has begun.      d.  It allows the CPA to disclose any potential conflicts of interest so that the client is      aware of them from day 1.e.  All of the above.

119.  Which of the following are mechanisms for monitoring the compliance with corporate code of conducts?

1. Employee surveys2. Annual sign-offs by some or all employees3. Reviews by legal department4. Ethics audit or internal audit procedures5. All of the above

120.  The most important aspect of an ethics program designed to ensure an effective understanding and commitment to one organization’s ethical principles is the choice of program orientation. Which of the following is not a commonly know orientation type for this purpose:

A.     Compliance-based.B.     Satisfaction of internal stakeholders.C.     Protect top management from blame.D.     Integrity or Values-based.E.      All of the above are commonly known orientation types for ethics program.

Posted 16th October 2012 by Jorge L. Verar, CFE  

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