Question 1

What argument can be made that SOX may not be effective in reducing fraud?

Accepted Answer

A) It is not as stringent as international standards 
B) The SEC has many laws for many years that have not seemed to make much of a difference 
C) The penalties under Sarbanes-Oxley are especially stringent,so it may not be enforced 
D) Civil and criminal penalties are not effective in preventing financial fraud 
A) It is not as stringent as international standards 
B) The SEC has many laws for many years that have not seemed to make much of a difference 
C) The penalties under Sarbanes-Oxley are especially stringent,so it may not be enforced 
D) Civil and criminal penalties are not effective in preventing financial fraud

Question 2

Which of the following elements do NOT have to be proved once a plaintiff has established the ability to sue under rule 10b-5?

Accepted Answer

A) Material,factual misrepresentation or omission 
B) Error by auditor led to plaintiffs' loss 
C) Reliance by the plaintiff on the financial statements 
D) Damages suffered by plaintiff as a result of reliance on the financial statements 
A) Material,factual misrepresentation or omission 
B) Error by auditor led to plaintiffs' loss 
C) Reliance by the plaintiff on the financial statements 
D) Damages suffered by plaintiff as a result of reliance on the financial statements

Question 3

A "particularized" allegation requires establishing:

Accepted Answer

A) Strong circumstantial evidence of conscious misbehavior 
B) Strong circumstantial evidence of recklessness 
C) Facts showing the defendant had both motive and opportunity to commit securities fraud 
D) All of the above 
A) Strong circumstantial evidence of conscious misbehavior 
B) Strong circumstantial evidence of recklessness 
C) Facts showing the defendant had both motive and opportunity to commit securities fraud 
D) All of the above

Question 4

The fraud at Satyam involved:

Accepted Answer

A) Related party transactions,fictitious revenue and falsified bank account balances 
B) Related party transactions,impaired assets and off-balance sheet entities 
C) Impaired assets,falsified bank account and facilitating payments 
D) Fictitious revenue,contingent liabilities and facilitating payments 
A) Related party transactions,fictitious revenue and falsified bank account balances 
B) Related party transactions,impaired assets and off-balance sheet entities 
C) Impaired assets,falsified bank account and facilitating payments 
D) Fictitious revenue,contingent liabilities and facilitating payments

Question 5

Which of the following is NOT an affirmative defense for those violating the FCPA?

Accepted Answer

A) The payment is lawful under the written laws of the foreign country 
B) The payment can be made for reasonable and bona fide expenditures 
C) A and B are both affirmative defenses 
D) None of the above 
A) The payment is lawful under the written laws of the foreign country 
B) The payment can be made for reasonable and bona fide expenditures 
C) A and B are both affirmative defenses 
D) None of the above

Question 6

PCAOB inspections of U.S.audit firms operating in China creates challenges because:

Accepted Answer

A) China requires the PCAOB to come to China to do their inspections 
B) The SEC has to work through the China Securities Regulatory Commission to facilitate inspections of U.S.audit firms operating in China 
C) China refuses to cooperate on any level with the SEC 
D) The SEC requires that U.S.audit firms operating in China transmit all work papers to the U.S.audit firm's headquarters before an inspection can take place 
A) China requires the PCAOB to come to China to do their inspections 
B) The SEC has to work through the China Securities Regulatory Commission to facilitate inspections of U.S.audit firms operating in China 
C) China refuses to cooperate on any level with the SEC 
D) The SEC requires that U.S.audit firms operating in China transmit all work papers to the U.S.audit firm's headquarters before an inspection can take place

Question 7

The accounting issue(s) in the Crazy Eddie case were:

Accepted Answer

A) Accelerating revenues into earlier periods 
B) Inflating inventory and net income 
C) Capitalizing costs that should have been expensed 
D) Off-balance sheet entities 
A) Accelerating revenues into earlier periods 
B) Inflating inventory and net income 
C) Capitalizing costs that should have been expensed 
D) Off-balance sheet entities

Question 8

Under the Securities Act of 1933 and the Securities and Exchange Act of 1934,accountants may be subject to criminal penalties for:

Accepted Answer

A) Obstruction of justice 
B) Securities fraud 
C) Willful violations of the securities acts 
D) Violations of internal controls 
A) Obstruction of justice 
B) Securities fraud 
C) Willful violations of the securities acts 
D) Violations of internal controls

Question 9

A payment made to induce a foreign government official to do something they might not otherwise be required to do is 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 10

Which of the following is NOT a requirement of Section 10A of the Securities Exchange Act of 1934 for auditors of public companies with respect to illegal acts?

Accepted Answer

A) Determine whether it is likely that an illegal act has occurred 
B) Determine what the possible effect of the illegal act is on the financial statements 
C) Determine whether management participated in the illegal act 
D) Inform management and assure that the audit committee knows about any material illegal act that has been detected 
A) Determine whether it is likely that an illegal act has occurred 
B) Determine what the possible effect of the illegal act is on the financial statements 
C) Determine whether management participated in the illegal act 
D) Inform management and assure that the audit committee knows about any material illegal act that has been detected

Question 11

The "particularity" provision in the PSLRA allows a plaintiff to:

Accepted Answer

A) Sue the auditor 
B) Assert scienter 
C) Sue management 
D) Assert privity 
A) Sue the auditor 
B) Assert scienter 
C) Sue management 
D) Assert privity

Question 12

Pfizer was investigated by the SEC for violating the Foreign Corrupt Practices Act (FCPA) because it allegedly:

Accepted Answer

A) Made improper payments to foreign officials to obtain regulatory and formulary approvals 
B) Made improper payments to foreign officials to obtain sales 
C) Made improper payments to foreign officials to obtain increased prescriptions for the company's pharmaceutical products 
D) All of the above 
A) Made improper payments to foreign officials to obtain regulatory and formulary approvals 
B) Made improper payments to foreign officials to obtain sales 
C) Made improper payments to foreign officials to obtain increased prescriptions for the company's pharmaceutical products 
D) All of the above

Question 13

The name of the international securities body that facilitates a country's choice to regulate the use and application of IFRS is:

Accepted Answer

A) International Accounting Standards Board 
B) International Federation of Accountants 
C) International Organization of Securities Commissions 
D) International Securities and Exchange Commission 
A) International Accounting Standards Board 
B) International Federation of Accountants 
C) International Organization of Securities Commissions 
D) International Securities and Exchange Commission

Question 14

The following clause was included in the engagement letter between Limits and Lobits,CPAs (L&L) and Fair,Inc.,an audit client of (L&L).

Accepted Answer

Fair,Inc.agrees to release,indemnify,and

Question 15

The Restatement (Second) of Torts Approach:

Accepted Answer

A) Expands an accountant's legal liability to third parties identified by the client as intended recipients of work 
B) Limits an accountant's legal liability to only those parties with which it has a privity relationship 
C) Limits an accountant's legal liability to only those parties that have been named by the client 
D) Expands an accountant's legal liability to all possible users of the audited financial statements 
A) Expands an accountant's legal liability to third parties identified by the client as intended recipients of work 
B) Limits an accountant's legal liability to only those parties with which it has a privity relationship 
C) Limits an accountant's legal liability to only those parties that have been named by the client 
D) Expands an accountant's legal liability to all possible users of the audited financial statements

Question 16

The international body responsible for developing and issuing high-quality ethical standards and other pronouncements for professional accountants for use around the world is:

Accepted Answer

A) International Organization of Securities Commissions 
B) International Accounting Standards Board 
C) International Ethics Board 
D) International Ethics Standards Board for Accountants 
A) International Organization of Securities Commissions 
B) International Accounting Standards Board 
C) International Ethics Board 
D) International Ethics Standards Board for Accountants

Question 17

The difference between the United Kingdom Bribery Act and the FCPA in the U.S.is:

Accepted Answer

A) The UK Bribery Act permits bribery as well as facilitating payments 
B) The UK Bribery Act prohibits both bribery and facilitating payments 
C) The FCPA permits both bribery and facilitating payments 
D) There are no differences between the two laws 
A) The UK Bribery Act permits bribery as well as facilitating payments 
B) The UK Bribery Act prohibits both bribery and facilitating payments 
C) The FCPA permits both bribery and facilitating payments 
D) There are no differences between the two laws

Question 18

Under the Private Securities Litigation Reform Act (PSLRA),if an auditor concludes that an illegal act with a material effect on the financial statements has been reported to,but not dealt with by senior management,the auditor should next report his/her conclusions to:

Accepted Answer

A) The Securities and Exchange Commission 
B) The company's board of directors 
C) The office of the controller/comptroller for the appropriate state 
D) The Federal Bureau of Investigation 
A) The Securities and Exchange Commission 
B) The company's board of directors 
C) The office of the controller/comptroller for the appropriate state 
D) The Federal Bureau of Investigation

Question 19

In the Vertical Pharmaceuticals case,Deloitte & Touche was sued because:

Accepted Answer

A) Vertical claimed the firm's false accusations of fraudulent conduct led to the withdrawal of another public company's planned acquisition of Vertical 
B) Deloitte failed to issue an audit report on a timely basis thereby leading to the withdrawal by another public company's planned acquisition of Vertical 
C) Vertical claimed Deloitte committed fraud in its audit of Vertical 
D) Deloitte issued a modified opinion (adverse) on Vertical's financial statements thereby leading to the withdrawal by another public company's planned acquisition of Vertical 
A) Vertical claimed the firm's false accusations of fraudulent conduct led to the withdrawal of another public company's planned acquisition of Vertical 
B) Deloitte failed to issue an audit report on a timely basis thereby leading to the withdrawal by another public company's planned acquisition of Vertical 
C) Vertical claimed Deloitte committed fraud in its audit of Vertical 
D) Deloitte issued a modified opinion (adverse) on Vertical's financial statements thereby leading to the withdrawal by another public company's planned acquisition of Vertical

Question 20

The International Federation of Accountants (IFAC) Policy Position Paper #4 A Public Interest Framework for the Accountancy Position addresses:

Accepted Answer

A) Bribery on an international level 
B) High standards of ethical behavior and professional judgment required in the accountancy profession 
C) Internal control to prevent fraud 
D) Corporate governance systems 
A) Bribery on an international level 
B) High standards of ethical behavior and professional judgment required in the accountancy profession 
C) Internal control to prevent fraud 
D) Corporate governance systems

What argument can be made that SOX may not be effective in reducing fraud?

Which of the following elements do NOT have to be proved once a plaintiff has established the ability to sue under rule 10b-5?

A "particularized" allegation requires establishing:

The fraud at Satyam involved:

Which of the following is NOT an affirmative defense for those violating the FCPA?

PCAOB inspections of U.S.audit firms operating in China creates challenges because:

The accounting issue(s) in the Crazy Eddie case were:

Under the Securities Act of 1933 and the Securities and Exchange Act of 1934,accountants may be subject to criminal penalties for:

A payment made to induce a foreign government official to do something they might not otherwise be required to do is a:

Which of the following is NOT a requirement of Section 10A of the Securities Exchange Act of 1934 for auditors of public companies with respect to illegal acts?

The "particularity" provision in the PSLRA allows a plaintiff to:

Pfizer was investigated by the SEC for violating the Foreign Corrupt Practices Act (FCPA) because it allegedly:

The name of the international securities body that facilitates a country's choice to regulate the use and application of IFRS is:

The following clause was included in the engagement letter between Limits and Lobits,CPAs (L&L) and Fair,Inc.,an audit client of (L&L).

The Restatement (Second) of Torts Approach:

The international body responsible for developing and issuing high-quality ethical standards and other pronouncements for professional accountants for use around the world is:

The difference between the United Kingdom Bribery Act and the FCPA in the U.S.is:

Under the Private Securities Litigation Reform Act (PSLRA),if an auditor concludes that an illegal act with a material effect on the financial statements has been reported to,but not dealt with by senior management,the auditor should next report his/her conclusions to:

In the Vertical Pharmaceuticals case,Deloitte & Touche was sued because:

The International Federation of Accountants (IFAC) Policy Position Paper #4 A Public Interest Framework for the Accountancy Position addresses:

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

What argument can be made that SOX may not be effective in reducing fraud?

Which of the following elements do NOT have to be proved once a plaintiff has established the ability to sue under rule 10b-5?

A "particularized" allegation requires establishing:

The fraud at Satyam involved:

Which of the following is NOT an affirmative defense for those violating the FCPA?

PCAOB inspections of U.S.audit firms operating in China creates challenges because:

The accounting issue(s) in the Crazy Eddie case were:

Under the Securities Act of 1933 and the Securities and Exchange Act of 1934,accountants may be subject to criminal penalties for:

A payment made to induce a foreign government official to do something they might not otherwise be required to do is a:

Which of the following is NOT a requirement of Section 10A of the Securities Exchange Act of 1934 for auditors of public companies with respect to illegal acts?

The "particularity" provision in the PSLRA allows a plaintiff to:

Pfizer was investigated by the SEC for violating the Foreign Corrupt Practices Act (FCPA) because it allegedly:

The name of the international securities body that facilitates a country's choice to regulate the use and application of IFRS is:

The following clause was included in the engagement letter between Limits and Lobits,CPAs (L&L) and Fair,Inc.,an audit client of (L&L).

The Restatement (Second) of Torts Approach:

The international body responsible for developing and issuing high-quality ethical standards and other pronouncements for professional accountants for use around the world is:

The difference between the United Kingdom Bribery Act and the FCPA in the U.S.is:

Under the Private Securities Litigation Reform Act (PSLRA),if an auditor concludes that an illegal act with a material effect on the financial statements has been reported to,but not dealt with by senior management,the auditor should next report his/her conclusions to:

In the Vertical Pharmaceuticals case,Deloitte & Touche was sued because:

The International Federation of Accountants (IFAC) Policy Position Paper #4 A Public Interest Framework for the Accountancy Position addresses:

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