Question 1

A privity relationship means that:

Accepted Answer

A) A party may be a user of the financial statements 
B) A party may sue if fraud has taken place 
C) A party's financial liability is limited 
D) A party has a contractual obligation 
A) A party may be a user of the financial statements 
B) A party may sue if fraud has taken place 
C) A party's financial liability is limited 
D) A party has a contractual obligation D

Question 2

The problem of a compliance approach in implementing global standards is that it can result in:

Accepted Answer

A) Achieving informal compliance without considering ethical consequences 
B) Achieving a true and fair view with respect to the auditor's report 
C) Achieving a dual system of boards of directors 
D) Achieving formal compliance without considering ethical consequences 
A) Achieving informal compliance without considering ethical consequences 
B) Achieving a true and fair view with respect to the auditor's report 
C) Achieving a dual system of boards of directors 
D) Achieving formal compliance without considering ethical consequences D

Question 3

With respect to U.S.GAAP,the SEC's approach to determining whether International Financial Reporting Standards (IFRS) should be allowed for and/or replace GAAP can be described as:

Accepted Answer

A) Transparency 
B) Comparability 
C) Convergence 
D) Condorsement 
A) Transparency 
B) Comparability 
C) Convergence 
D) Condorsement D

Question 4

Principles-based standards differ from a rules-based approach because:

Accepted Answer

A) Principles-based standards rely on bright-line concepts to apply accounting standards 
B) Rules-based standards rely on bright-line rules to apply accounting standards 
C) Principles-based standards set uniform goals for the application of accounting standards 
D) Rules-based standards form the basis of IFRS 
A) Principles-based standards rely on bright-line concepts to apply accounting standards 
B) Rules-based standards rely on bright-line rules to apply accounting standards 
C) Principles-based standards set uniform goals for the application of accounting standards 
D) Rules-based standards form the basis of IFRS

Question 5

The FCPA requires all SEC registrants to have each of the following except:

Accepted Answer

A) Maintain internal accounting controls 
B) Ensure all transactions are authorized by management and recorded properly 
C) Maintain information systems that prevent fraudulent activities that violate the FCPA 
D) Maintain adequate books and records to fairly reflect an issuer's transactions and disposition of assets 
A) Maintain internal accounting controls 
B) Ensure all transactions are authorized by management and recorded properly 
C) Maintain information systems that prevent fraudulent activities that violate the FCPA 
D) Maintain adequate books and records to fairly reflect an issuer's transactions and disposition of assets

Question 6

The Richards & Co.case raises questions for the quality review partner because the client had:

Accepted Answer

A) Accelerated revenue into an earlier period without proper documentation 
B) Delayed expenses into a later period through the use of reserves 
C) Violated the Foreign Corrupt Practices Act 
D) Recorded supplier-provide credits as revenue with the promise of purchasing merchandise from that supplier 
A) Accelerated revenue into an earlier period without proper documentation 
B) Delayed expenses into a later period through the use of reserves 
C) Violated the Foreign Corrupt Practices Act 
D) Recorded supplier-provide credits as revenue with the promise of purchasing merchandise from that supplier

Question 7

Describe the steps auditors should take to protect themselves against allegations that fraud went undetected during the audit.

Accepted Answer

The role of the external auditor is to p

Question 8

Lotus Hospitality,a U.S.publicly-owned company doing business in China,deals with state-owned enterprises in a variety of countries.It is common for Chinese companies to pay custom officials in these countries amounts ranging from $100-$500 to enable their goods to be off-loaded at the receiving docks in each country.To show its appreciation for the many years of doing business in these countries,Lotus invited 50 government officials and employees of state-owned enterprises to attend the Olympic Games in China at the company's expense,and ultimately paid for such guests as well as some spouses and others who attended along with them.Sponsored guests were primarily from countries in Africa and Asia,and they enjoyed three- and four-day hospitality packages that included event tickets,luxury hotel accommodations,and sightseeing excursions valued at $12,000 to $16,000 per package.In return for the generosity of Lotus Hospitality,the state-owned enterprises promised to give preference to Chinese companies when multi-million dollar contracts are awarded.
Describe the nature of these payments under the Foreign Corrupt Practices Act (FCPA) and assess their legality.What are the potential ethical issues of allowing certain types of payments under the Act?

Accepted Answer

The payments of $100-$500 to expedite of

Question 9

Which of the following is NOT a valid defense to legal liability under the Securities Act of 1933?

Accepted Answer

A) Materiality defense 
B) Non-negligence defense 
C) Due diligence defense 
D) Lack of causation defense 
A) Materiality defense 
B) Non-negligence defense 
C) Due diligence defense 
D) Lack of causation defense

Question 10

A payment made to foreign government officials to ensure that they do what is expected given their job requirements can be characterized as a:

Accepted Answer

A) Bribe 
B) Asset misappropriation 
C) Facilitating Payment 
D) Legal Payment 
A) Bribe 
B) Asset misappropriation 
C) Facilitating Payment 
D) Legal Payment

Question 11

The legal precedent that evolves from legal opinions issued by judges in deciding a case and guides judges in deciding similar cases in the future is referred to as:

Accepted Answer

A) Business law 
B) Tort law 
C) Common law 
D) Statutory law 
A) Business law 
B) Tort law 
C) Common law 
D) Statutory law

Question 12

Under the Securities Act of 1933,accountants who assist in the preparation of the registration statement are civilly liable if the registration statement:

Accepted Answer

A) Contains untrue statements of material fact 
B) Omits material facts required by statute or regulation 
C) Omits information that if not given makes the facts stated misleading 
D) All of the above 
A) Contains untrue statements of material fact 
B) Omits material facts required by statute or regulation 
C) Omits information that if not given makes the facts stated misleading 
D) All of the above

Question 13

The ethical dilemma in the Getaway Cruise Lines case can best be described as:

Accepted Answer

A) The external auditors are being blocked by the client in attempting to verify accounting treatment of surplus electricity and water provided by the client to the local government 
B) The Director of International Accounting questions the requirement to provide surplus electricity and water to the local government 
C) The external auditors question the requirement to make facilitating payments to the local authorities 
D) The Director of International Accounting questions the requirement to provide surplus electricity and water and make facilitating payments to the local authorities 
A) The external auditors are being blocked by the client in attempting to verify accounting treatment of surplus electricity and water provided by the client to the local government 
B) The Director of International Accounting questions the requirement to provide surplus electricity and water to the local government 
C) The external auditors question the requirement to make facilitating payments to the local authorities 
D) The Director of International Accounting questions the requirement to provide surplus electricity and water and make facilitating payments to the local authorities

Question 14

The defendant-auditors in the Anjoorian case argued,in their defense,that:

Accepted Answer

A) To be found guilty to third parties,the court must find that an accountant had contemplated a specific transaction for which the financial statement will be used and that no such transaction was contemplated. 
B) The plaintiff's theory of damages did not meet the foreseen legal criteria 
C) They had no liability to the client because the client did not rely on the audited financial statements 
D) They followed generally accepted auditing standards 
A) To be found guilty to third parties,the court must find that an accountant had contemplated a specific transaction for which the financial statement will be used and that no such transaction was contemplated. 
B) The plaintiff's theory of damages did not meet the foreseen legal criteria 
C) They had no liability to the client because the client did not rely on the audited financial statements 
D) They followed generally accepted auditing standards

Question 15

The Securities and Exchange Act of 1934:

Accepted Answer

A) Limits the financial liability of independent auditors except in the case of gross negligence 
B) Requires the filing of audited annual statements and reviewed quarterly statements 
C) Regulates the initial offering financial statements of securities 
D) Regulates which services may be performed for a publicly-traded company by an audit firm 
A) Limits the financial liability of independent auditors except in the case of gross negligence 
B) Requires the filing of audited annual statements and reviewed quarterly statements 
C) Regulates the initial offering financial statements of securities 
D) Regulates which services may be performed for a publicly-traded company by an audit firm

Question 16

Explain the provisions of section 302 of the Sarbanes-Oxley Act including obligations of officers; nature and scope of assertions; accounting requirements; and legal liability of officers.

Accepted Answer

A company's CEO and CFO must each provid

Question 17

The unique aspect of auditors' legal liability in the Rosenblum v.Adler ruling is:

Accepted Answer

A) Auditors could be held liable for ordinary negligence to all reasonably foreseeable third parties 
B) Auditors could be held liable for gross negligence to all reasonably foreseeable third parties 
C) Auditors could be held liable for fraud to all reasonably foreseeable third parties 
D) Auditors should be able to detect all deceit by management 
A) Auditors could be held liable for ordinary negligence to all reasonably foreseeable third parties 
B) Auditors could be held liable for gross negligence to all reasonably foreseeable third parties 
C) Auditors could be held liable for fraud to all reasonably foreseeable third parties 
D) Auditors should be able to detect all deceit by management

Question 18

One feature of a corporate governance system commonly found outside the U.S.is:

Accepted Answer

A) Unitary board of directors 
B) Dual system of boards of directors 
C) No board of directors 
D) Acceptance of facilitating payments and bribery 
A) Unitary board of directors 
B) Dual system of boards of directors 
C) No board of directors 
D) Acceptance of facilitating payments and bribery

Question 19

Which of the following is NOT one of the defenses an auditor can use against third party lawsuits for fraud?

Accepted Answer

A) The third party was not in contractual privity 
B) The auditor did not have a duty to the third party 
C) The third party was negligent 
D) The third party did not suffer a loss 
A) The third party was not in contractual privity 
B) The auditor did not have a duty to the third party 
C) The third party was negligent 
D) The third party did not suffer a loss

Question 20

An audit engagement letter:

Accepted Answer

A) Offers an auditor's services to a client 
B) Is required by generally accepted auditing standards (GAAS) 
C) Details the SEC's expectations for the audit firm for a specific engagement 
D) Formalizes the relationship between the auditor and the client for a specific engagement 
A) Offers an auditor's services to a client 
B) Is required by generally accepted auditing standards (GAAS) 
C) Details the SEC's expectations for the audit firm for a specific engagement 
D) Formalizes the relationship between the auditor and the client for a specific engagement

A privity relationship means that:

The problem of a compliance approach in implementing global standards is that it can result in:

With respect to U.S.GAAP,the SEC's approach to determining whether International Financial Reporting Standards (IFRS) should be allowed for and/or replace GAAP can be described as:

Principles-based standards differ from a rules-based approach because:

The FCPA requires all SEC registrants to have each of the following except:

The Richards & Co.case raises questions for the quality review partner because the client had:

Describe the steps auditors should take to protect themselves against allegations that fraud went undetected during the audit.

Which of the following is NOT a valid defense to legal liability under the Securities Act of 1933?

A payment made to foreign government officials to ensure that they do what is expected given their job requirements can be characterized as a:

The legal precedent that evolves from legal opinions issued by judges in deciding a case and guides judges in deciding similar cases in the future is referred to as:

Under the Securities Act of 1933,accountants who assist in the preparation of the registration statement are civilly liable if the registration statement:

The ethical dilemma in the Getaway Cruise Lines case can best be described as:

The defendant-auditors in the Anjoorian case argued,in their defense,that:

The Securities and Exchange Act of 1934:

Explain the provisions of section 302 of the Sarbanes-Oxley Act including obligations of officers; nature and scope of assertions; accounting requirements; and legal liability of officers.

The unique aspect of auditors' legal liability in the Rosenblum v.Adler ruling is:

One feature of a corporate governance system commonly found outside the U.S.is:

Which of the following is NOT one of the defenses an auditor can use against third party lawsuits for fraud?

An audit engagement letter:

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Organizational Ethics and Corporate Governance

Ethics and Professional Judgment in Accounting

Fraud in Financial Statements and Auditor Responsibilities

Earnings Management

Ethical Leadership and Decision-Making in Accounting

Filters

Exam 6: Legal, Regulatory, and Professional Obligations of Auditors

A privity relationship means that:

The problem of a compliance approach in implementing global standards is that it can result in:

With respect to U.S.GAAP,the SEC's approach to determining whether International Financial Reporting Standards (IFRS) should be allowed for and/or replace GAAP can be described as:

Principles-based standards differ from a rules-based approach because:

The FCPA requires all SEC registrants to have each of the following except:

The Richards & Co.case raises questions for the quality review partner because the client had:

Describe the steps auditors should take to protect themselves against allegations that fraud went undetected during the audit.

Which of the following is NOT a valid defense to legal liability under the Securities Act of 1933?

A payment made to foreign government officials to ensure that they do what is expected given their job requirements can be characterized as a:

The legal precedent that evolves from legal opinions issued by judges in deciding a case and guides judges in deciding similar cases in the future is referred to as:

Under the Securities Act of 1933,accountants who assist in the preparation of the registration statement are civilly liable if the registration statement:

The ethical dilemma in the Getaway Cruise Lines case can best be described as:

The defendant-auditors in the Anjoorian case argued,in their defense,that:

The Securities and Exchange Act of 1934:

Explain the provisions of section 302 of the Sarbanes-Oxley Act including obligations of officers; nature and scope of assertions; accounting requirements; and legal liability of officers.

The unique aspect of auditors' legal liability in the Rosenblum v.Adler ruling is:

One feature of a corporate governance system commonly found outside the U.S.is:

Which of the following is NOT one of the defenses an auditor can use against third party lawsuits for fraud?

An audit engagement letter:

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Organizational Ethics and Corporate Governance

Ethics and Professional Judgment in Accounting

Fraud in Financial Statements and Auditor Responsibilities

Earnings Management

Ethical Leadership and Decision-Making in Accounting

Filters