Question 1

An ethical corporate culture includes:

Accepted Answer

A)  Zero tolerance for individual and collective mistakes 
B)  An explicit statement of values. 
C)  A focus on results over process 
D)  A culture of do what I say, not what I do 
A)  Zero tolerance for individual and collective mistakes 
B)  An explicit statement of values. 
C)  A focus on results over process 
D)  A culture of do what I say, not what I do B

Question 2

Proper tone at the top includes all of the following except:

Accepted Answer

A)  Communicating compliance and ethics messaging to employees 
B)  Regularly reminding employees of the importance of ethical behavior 
C)  Rarely enforcing the code of conduct 
D)  Modeling the company's values 
A)  Communicating compliance and ethics messaging to employees 
B)  Regularly reminding employees of the importance of ethical behavior 
C)  Rarely enforcing the code of conduct 
D)  Modeling the company's values C

Question 3

A strong and effective internal control environment can be enhanced by:

Accepted Answer

A)  Financial statements that present fairly financial position and results of operations 
B)  Giving the internal auditors direct and unrestricted access to the audit committee 
C)  Having the internal auditors report to the external auditors 
D)  Having the external auditors report to the audit committee 
A)  Financial statements that present fairly financial position and results of operations 
B)  Giving the internal auditors direct and unrestricted access to the audit committee 
C)  Having the internal auditors report to the external auditors 
D)  Having the external auditors report to the audit committee B

Question 4

Backdating of stock options is unethical because:

Accepted Answer

A)  It favors top executives over other company employees with respect to the number of options 
B)  It purposefully manipulates the option criteria that determine their value 
C)  It changes the exercise price on options to benefit top executives 
D)  It changes the exercise date on options to benefit top executives 
A)  It favors top executives over other company employees with respect to the number of options 
B)  It purposefully manipulates the option criteria that determine their value 
C)  It changes the exercise price on options to benefit top executives 
D)  It changes the exercise date on options to benefit top executives

Question 5

The level of care expected of a reasonable person under similar circumstances in meeting one's fiduciary duty is called:

Accepted Answer

A)  Duty of loyalty 
B)  Duty of care 
C)  Transparency 
D)  Fairness 
A)  Duty of loyalty 
B)  Duty of care 
C)  Transparency 
D)  Fairness

Question 6

Has SOX accomplished its intended goal of reliable financial reporting by public companies?

Accepted Answer

A)  Yes, as the CEO and CFO are certifying that financial statements contain no material misstatements. 
B)  Maybe, as very few defendants have been charged with false certification, and fewer still have been convicted. 
C)  Maybe, as laws are needed but they serve as only a minimum standard of ethical conduct and may not lead to ethical conduct. 
D)  No, as the SEC has unsuccessfully sought to collected disgorgement of bonuses and other compensations of officers. 
A)  Yes, as the CEO and CFO are certifying that financial statements contain no material misstatements. 
B)  Maybe, as very few defendants have been charged with false certification, and fewer still have been convicted. 
C)  Maybe, as laws are needed but they serve as only a minimum standard of ethical conduct and may not lead to ethical conduct. 
D)  No, as the SEC has unsuccessfully sought to collected disgorgement of bonuses and other compensations of officers.

Question 7

The ACFE found that the most common way that fraud is first detected is:

Accepted Answer

A)  Internal audit 
B)  Internal controls 
C)  External audit 
D)  Tip 
A)  Internal audit 
B)  Internal controls 
C)  External audit 
D)  Tip

Question 8

Examples of improper asset valuation includes all of the following except:

Accepted Answer

A)  Manipulating reserves 
B)  Changing the useful life of assets 
C)  Recording sales that never took place 
D)  Manipulating estimates of fair market value 
A)  Manipulating reserves 
B)  Changing the useful life of assets 
C)  Recording sales that never took place 
D)  Manipulating estimates of fair market value

Question 9

The Clawback rule allows:

Accepted Answer

A)  protection for whistleblowers from retaliation 
B)  recovering compensation from CEOs who engage in financial statement misconduct 
C)  compensation for whistleblowers 
D)  protections for CEOs who act in good faith 
A)  protection for whistleblowers from retaliation 
B)  recovering compensation from CEOs who engage in financial statement misconduct 
C)  compensation for whistleblowers 
D)  protections for CEOs who act in good faith

Question 10

External auditor communications with the audit committee include each of the following except:

Accepted Answer

A)  Matters related to why certain accounting policies are considered critical 
B)  Shareholder returns 
C)  Significant estimates made by management 
D)  Significant unusual transactions 
A)  Matters related to why certain accounting policies are considered critical 
B)  Shareholder returns 
C)  Significant estimates made by management 
D)  Significant unusual transactions

Question 11

What is the main fiduciary duty of the board of directors?

Accepted Answer

A)  Maximize profits for the company 
B)  Monitor executive compensation 
C)  Safeguard the interests of corporation and its shareholders 
D)  Allow high risk accounting practices 
A)  Maximize profits for the company 
B)  Monitor executive compensation 
C)  Safeguard the interests of corporation and its shareholders 
D)  Allow high risk accounting practices

Question 12

What are the five elements of the framework for understanding ethical decision making in business?

Accepted Answer

A)  Ethical issue sensitivity; individual factors; organizational factors; opportunity; and business ethics intentions and evaluations. 
B)  Individual factors; organizational factors; opportunity; moral character; and business ethics intentions, behavior, and evaluations. 
C)  Ethical issue intensity; individual factors; organizational factors; opportunity; and business ethics intentions, behavior, and evaluations. 
D)  Organizational factors; opportunity; moral judgment; individual values; and business ethics intentions, behavior, and evaluations. 
A)  Ethical issue sensitivity; individual factors; organizational factors; opportunity; and business ethics intentions and evaluations. 
B)  Individual factors; organizational factors; opportunity; moral character; and business ethics intentions, behavior, and evaluations. 
C)  Ethical issue intensity; individual factors; organizational factors; opportunity; and business ethics intentions, behavior, and evaluations. 
D)  Organizational factors; opportunity; moral judgment; individual values; and business ethics intentions, behavior, and evaluations.

Question 13

In the business world, the term disgorgement means:

Accepted Answer

A)  To give up one's meal after eating 
B)  To return profits earned illegally 
C)  To return ill-gotten gains 
D)  To give up one's board position after a fraud incident 
A)  To give up one's meal after eating 
B)  To return profits earned illegally 
C)  To return ill-gotten gains 
D)  To give up one's board position after a fraud incident

Question 14

Under the Sarbanes-Oxley Act, which of the following bodies must contain members that are 100% independent of management?

Accepted Answer

A)  Board of directors 
B)  Audit committee 
C)  Internal auditors 
D)  Board of supervisors 
A)  Board of directors 
B)  Audit committee 
C)  Internal auditors 
D)  Board of supervisors

Question 15

According to the ACFE survey, the most common type of occupational fraud scheme is:

Accepted Answer

A)  Corruption 
B)  Fraudulent billing 
C)  Illegal gratuities 
D)  Asset misappropriation 
A)  Corruption 
B)  Fraudulent billing 
C)  Illegal gratuities 
D)  Asset misappropriation

Question 16

What is the ethical issue in the Rite Aid Inventory Surplus Fraud case?

Accepted Answer

A)  The surplus inventory sales and kickback involved collusion between two officers of the company. When Foster wanted to stop the scheme, he was blackmailed in continuing the fraud. 
B)  Rite-Aid had a comprehensive corporate governance system that complied with all the requirements of Sarbanes-Oxley. 
C)  The internal auditor found and blew the whistle on the surplus inventory sales and kickback cover-up. 
D)  Vice Presidents of the company were involved in a material, nine year surplus inventory sales and kickback scheme. 
A)  The surplus inventory sales and kickback involved collusion between two officers of the company. When Foster wanted to stop the scheme, he was blackmailed in continuing the fraud. 
B)  Rite-Aid had a comprehensive corporate governance system that complied with all the requirements of Sarbanes-Oxley. 
C)  The internal auditor found and blew the whistle on the surplus inventory sales and kickback cover-up. 
D)  Vice Presidents of the company were involved in a material, nine year surplus inventory sales and kickback scheme.

Question 17

Is whistleblowing a moral practice? How might you evaluate whether it is or is not?

Accepted Answer

A broad view of whistleblowing is the di

Question 18

Trust in business is important because:

Accepted Answer

A)  Management needs to feel confident that employees will carry out organizational objectives 
B)  Stakeholders need to feel confident that relationships with organizations will be consistent and reliable 
C)  Stakeholders rely on management to produce shareholder returns 
D)  Management needs to feel confident that those with relationships with the organization do what they say 
A)  Management needs to feel confident that employees will carry out organizational objectives 
B)  Stakeholders need to feel confident that relationships with organizations will be consistent and reliable 
C)  Stakeholders rely on management to produce shareholder returns 
D)  Management needs to feel confident that those with relationships with the organization do what they say

Question 19

Tommy Hubbs is the new controller of XYZ Corporation. Recently, Hubbs was approached by Carol Franks, the CFO, and told in no uncertain terms to record $100,000 in revenue at the end of 2015 even though the sale was not made until January 3, 2016. Hubbs contacts a good friend who used to be the controller of XYZ and is told the environment of the company is one of loyalty at all costs. His friend shares that he left the company because of differences on numerous accounting issues. The friend advises Hubbs to let it go this one time to show he is a team player.
Assume Hubbs decides not to go along with Franks' dictum. Prepare an outline to help him give voice to his values and attempt to change hearts and minds of those in XYZ that might block proper accounting.
Use the following to guide students on what is expected of them in answering this question.
As you read the case, think about the following series of questions for the protagonist to address after identifying the right thing to do including:
• How can they get it done effectively and efficiently?
• What do they need to say, to whom, and in what sequence?
• What will the objections or push-back be and, then?
• What would they say next? What data and examples do they need?

Accepted Answer

To assist you in the process of analyzin

Question 20

The key fraud issue in the Franklin Industries Whistleblowing Case is:

Accepted Answer

A)  Fraudulent financial statements were covered-up 
B)  Corporate culture pressured an employee to go along with fraud 
C)  Retaliation for reporting an embezzlement fraud 
D)  Recording revenues too soon led to fraudulent statements 
A)  Fraudulent financial statements were covered-up 
B)  Corporate culture pressured an employee to go along with fraud 
C)  Retaliation for reporting an embezzlement fraud 
D)  Recording revenues too soon led to fraudulent statements

An ethical corporate culture includes:

Proper tone at the top includes all of the following except:

A strong and effective internal control environment can be enhanced by:

Backdating of stock options is unethical because:

The level of care expected of a reasonable person under similar circumstances in meeting one's fiduciary duty is called:

Has SOX accomplished its intended goal of reliable financial reporting by public companies?

The ACFE found that the most common way that fraud is first detected is:

Examples of improper asset valuation includes all of the following except:

The Clawback rule allows:

External auditor communications with the audit committee include each of the following except:

What is the main fiduciary duty of the board of directors?

What are the five elements of the framework for understanding ethical decision making in business?

In the business world, the term disgorgement means:

Under the Sarbanes-Oxley Act, which of the following bodies must contain members that are 100% independent of management?

According to the ACFE survey, the most common type of occupational fraud scheme is:

What is the ethical issue in the Rite Aid Inventory Surplus Fraud case?

Is whistleblowing a moral practice? How might you evaluate whether it is or is not?

Trust in business is important because:

The key fraud issue in the Franklin Industries Whistleblowing Case is:

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Ethics and Professional Judgment in Accounting

Fraud in Financial Statements and Auditor Responsibilities

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management

Ethical Leadership and Decision-Making in Accounting

Filters

Exam 3: Organizational Ethics and Corporate Governance

An ethical corporate culture includes:

Proper tone at the top includes all of the following except:

A strong and effective internal control environment can be enhanced by:

Backdating of stock options is unethical because:

The level of care expected of a reasonable person under similar circumstances in meeting one's fiduciary duty is called:

Has SOX accomplished its intended goal of reliable financial reporting by public companies?

The ACFE found that the most common way that fraud is first detected is:

Examples of improper asset valuation includes all of the following except:

The Clawback rule allows:

External auditor communications with the audit committee include each of the following except:

What is the main fiduciary duty of the board of directors?

What are the five elements of the framework for understanding ethical decision making in business?

In the business world, the term disgorgement means:

Under the Sarbanes-Oxley Act, which of the following bodies must contain members that are 100% independent of management?

According to the ACFE survey, the most common type of occupational fraud scheme is:

What is the ethical issue in the Rite Aid Inventory Surplus Fraud case?

Is whistleblowing a moral practice? How might you evaluate whether it is or is not?

Trust in business is important because:

The key fraud issue in the Franklin Industries Whistleblowing Case is:

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Ethics and Professional Judgment in Accounting

Fraud in Financial Statements and Auditor Responsibilities

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management

Ethical Leadership and Decision-Making in Accounting

Filters