Question 1

The 2012 Global Fraud Survey of the ACFE points to the need for management to "walk the talk" of ethics by:

Accepted Answer

A)  Clearly demonstrating that noncompliance will lead to firing of the guilty employee 
B)  Treat different offenses the same to develop consistency in policies 
C)  Encourage whistleblowing to provide a mechanism to report wrongdoing 
D)  Being consistent for particular offenses to avoid the appearance of selective enforcement 
A)  Clearly demonstrating that noncompliance will lead to firing of the guilty employee 
B)  Treat different offenses the same to develop consistency in policies 
C)  Encourage whistleblowing to provide a mechanism to report wrongdoing 
D)  Being consistent for particular offenses to avoid the appearance of selective enforcement D

Question 2

Explain the difference between global fraud, bribery, and illegal acts. What standards exist on a global level to combat these problems?

Accepted Answer

Global fraud, bribery, and illegal acts are all forms of unethical and illegal behavior that can have significant negative impacts on businesses, economies, and societies.

Global fraud refers to any intentional deception or misrepresentation that results in financial or personal gain. This can include activities such as embezzlement, money laundering, and financial statement fraud.

Bribery involves the offering, giving, receiving, or soliciting of any item of value as a means of influencing the actions of an individual or organization. This can include bribes to government officials, corporate executives, or other individuals in positions of power.

Illegal acts encompass a wide range of activities that are prohibited by law, including but not limited to theft, fraud, corruption, and money laundering.

To combat these problems on a global level, there are several standards and initiatives in place. One of the most prominent is the United Nations Convention against Corruption (UNCAC), which is a legally binding international anti-corruption instrument. The UNCAC aims to promote and strengthen measures to prevent and combat corruption, as well as to promote the implementation of measures to prevent and combat money-laundering and to facilitate the return of stolen assets.

Additionally, the Organisation for Economic Co-operation and Development (OECD) has developed the Anti-Bribery Convention, which requires member countries to criminalize bribery of foreign public officials and put in place effective enforcement mechanisms.

Furthermore, the Financial Action Task Force (FATF) sets international standards for combating money laundering and terrorist financing, and conducts regular evaluations of countries' compliance with these standards.

Overall, these global standards and initiatives play a crucial role in addressing and combating global fraud, bribery, and illegal acts by promoting transparency, accountability, and ethical business practices on a global scale.

Question 3

A study by the SEC notes that imperfections exist when standards are established on either a rules-based or a principles-based basis only. The SEC recommends that standards should have all of the following characteristics except:

Accepted Answer

A)  Enumerate exceptions from the standard. 
B)  Provide sufficient detail and structure so that the standard can be operationalized and applied on a consistent basis. 
C)  Avoid use of bright lines that allow structuring of financial transactions to achieve technical compliance while evading the intent of the standard. 
D)  Be based on a consistently applied conceptual framework. 
A)  Enumerate exceptions from the standard. 
B)  Provide sufficient detail and structure so that the standard can be operationalized and applied on a consistent basis. 
C)  Avoid use of bright lines that allow structuring of financial transactions to achieve technical compliance while evading the intent of the standard. 
D)  Be based on a consistently applied conceptual framework. A

Question 4

The following is a similarity between the AICPA Code of Professional Ethics and the IFAC Code:

Accepted Answer

A)  To engage in whistleblowing when the audit client refuses to make recommended changes in the financial report 
B)  To report to the audit committee all differences in opinion on accounting matters 
C)  To identify threats to independence and develop safeguards to mitigate the threats 
D)  All of these 
A)  To engage in whistleblowing when the audit client refuses to make recommended changes in the financial report 
B)  To report to the audit committee all differences in opinion on accounting matters 
C)  To identify threats to independence and develop safeguards to mitigate the threats 
D)  All of these

Question 5

The SEC study of a principles-based system identifies each of the following characteristics that should guide standards setting except for:

Accepted Answer

A)  Be based on an improved and consistently applied conceptual framework 
B)  Clearly state the accounting objective of the standard 
C)  Minimize exceptions from the standards 
D)  Minimize the detail and structure so that the standard can be operationalized and applied on a consistent basis 
A)  Be based on an improved and consistently applied conceptual framework 
B)  Clearly state the accounting objective of the standard 
C)  Minimize exceptions from the standards 
D)  Minimize the detail and structure so that the standard can be operationalized and applied on a consistent basis

Question 6

A "secret" or "hidden" reserve can occur when a company does one or more of the following

Accepted Answer

A)  Deliberately measure an asset at an unsubstantiated high value 
B)  Deliberately measures an asset at an unsubstantiated low value 
C)  Sets up overstated accrual liabilities 
D)  All of these 
A)  Deliberately measure an asset at an unsubstantiated high value 
B)  Deliberately measures an asset at an unsubstantiated low value 
C)  Sets up overstated accrual liabilities 
D)  All of these

Question 7

In China and India different ownership groups often play a role much more important than these groups play in the U.S. Describe the different ownership patterns in China and India. Why do you think these groups have a larger role to play? Are there any concerns about the fact that they play such a larger role?

Accepted Answer

In China, the ownership patterns are hea

Question 8

Consider the discussion in the chapter about establishing one set of accounting standards and comment on whether you think there should be one set of educational standards for accounting students at educational institutions in countries that comply with IFRS. Should there be a uniform CPA (Chartered Accountants) Exam for all such students? Why or why not?

Accepted Answer

The discussion about establishing one se

Question 9

The Global Survey on Business Ethics reports each of the following results except for:

Accepted Answer

A)  There has been an increase of 10 to 15% in the number of organizations providing both statements of ethical values and a code of ethics 
B)  A "tone at the top" is followed in a majority of the companies 
C)  Just over one-third agree or strongly agree that ethical standards are not fully monitored 
D)  There has been an increase in those observing ethical misconduct over the course of a year 
A)  There has been an increase of 10 to 15% in the number of organizations providing both statements of ethical values and a code of ethics 
B)  A "tone at the top" is followed in a majority of the companies 
C)  Just over one-third agree or strongly agree that ethical standards are not fully monitored 
D)  There has been an increase in those observing ethical misconduct over the course of a year

Question 10

The comply or explain principle refers to:

Accepted Answer

A)  Certification of financial statements by CEOs and CFOs 
B)  Explain any gaps between existing corporate governance practices and recommendations by authoritative bodies/pronouncements and actual governance policies 
C)  Explain any gaps between existing corporate governance practices and IFRS requirements 
D)  Certification of corporate governance practices by CEOs and CFOs 
A)  Certification of financial statements by CEOs and CFOs 
B)  Explain any gaps between existing corporate governance practices and recommendations by authoritative bodies/pronouncements and actual governance policies 
C)  Explain any gaps between existing corporate governance practices and IFRS requirements 
D)  Certification of corporate governance practices by CEOs and CFOs

Question 11

According to CLSA Corporate Governance Watch 2012:

Accepted Answer

A)  India's corporate governance score declined by three percentage points from 2010 to 2012 
B)  China's corporate governance score increased by four percentage points from 2010 to 2012 
C)  Singapore had the highest corporate governance score 
D)  All of these 
A)  India's corporate governance score declined by three percentage points from 2010 to 2012 
B)  China's corporate governance score increased by four percentage points from 2010 to 2012 
C)  Singapore had the highest corporate governance score 
D)  All of these

Question 12

Explain the relationship between Gray's accounting values and Hofstede's cultural values. Give an example of how these values are related in a particular country of your choice except the U.S.

Accepted Answer

Gray's accounting values and Hofstede's

Question 13

The 2012 Global Fraud Survey conducted by the ACFE identifies each of the following efforts to combat global fraud except for:

Accepted Answer

A)  Evaluate the legal and regulatory enforcement environment 
B)  Assess risks to the company's business, brand, and reputation 
C)  Create a level of independence from accountants and auditors so fraud can be more easily detected 
D)  Educate the workforce about the risks of wrongdoing 
A)  Evaluate the legal and regulatory enforcement environment 
B)  Assess risks to the company's business, brand, and reputation 
C)  Create a level of independence from accountants and auditors so fraud can be more easily detected 
D)  Educate the workforce about the risks of wrongdoing

Question 14

The UK Bribery Act establishes six principles to guide adequate procedures to deal with bribery including:

Accepted Answer

A)  Risk assessment 
B)  Tone at the top 
C)  Whistleblowing 
D)  Audit committee 
A)  Risk assessment 
B)  Tone at the top 
C)  Whistleblowing 
D)  Audit committee

Question 15

The Serious Frauds Office in the UK identified each of the following as a "red flag" indicating corruption may exist except for:

Accepted Answer

A)  Abnormal cash payments 
B)  Payments made through a third-party country 
C)  Payments made behind schedule 
D)  Agreeing to contracts not favorable to the organization 
A)  Abnormal cash payments 
B)  Payments made through a third-party country 
C)  Payments made behind schedule 
D)  Agreeing to contracts not favorable to the organization

Question 16

Explain why you think the authors of studies cited in the text were concerned about whether a principles-based approach to standard setting might lead to earnings management.

Accepted Answer

The authors of the studies cited in the

Question 17

Good ethics is important on a global level because

Accepted Answer

A)  There needs to be a mechanism to punish companies that violate ethical standards outside their home country 
B)  International enforcement of IFRS depends on ethical behavior in the accounting and financial reporting process 
C)  Multinational companies should strive to act ethically in all activities whether at home or abroad 
D)  All of these 
A)  There needs to be a mechanism to punish companies that violate ethical standards outside their home country 
B)  International enforcement of IFRS depends on ethical behavior in the accounting and financial reporting process 
C)  Multinational companies should strive to act ethically in all activities whether at home or abroad 
D)  All of these

Question 18

The reason some people are concerned about the possibility for earnings management under IFRS is:

Accepted Answer

A)  The principles-based system might lead preparers of financial statements to try and justify earnings by applying a substance over form concept 
B)  The principles-based system might lead preparers of financial statements to try and justify specific accounting outcome based on commercial drivers 
C)  It is more difficult to make materiality judgments 
D)  It is more difficult to implement a set of generally accepted accounting and financial reporting standards 
A)  The principles-based system might lead preparers of financial statements to try and justify earnings by applying a substance over form concept 
B)  The principles-based system might lead preparers of financial statements to try and justify specific accounting outcome based on commercial drivers 
C)  It is more difficult to make materiality judgments 
D)  It is more difficult to implement a set of generally accepted accounting and financial reporting standards

Question 19

The rules under IFRS for property, plant, and equipment differ from U.S. GAAP because:

Accepted Answer

A)  U.S. GAAP allows for the revaluation of property, plant, and equipment 
B)  IFRS allows for the revaluation of property, plant, and equipment 
C)  U.S. GAAP allows for recovery of revaluation amounts 
D)  IFRS prohibits the revaluation of property, plant, and equipment 
A)  U.S. GAAP allows for the revaluation of property, plant, and equipment 
B)  IFRS allows for the revaluation of property, plant, and equipment 
C)  U.S. GAAP allows for recovery of revaluation amounts 
D)  IFRS prohibits the revaluation of property, plant, and equipment

Question 20

Explain the role of ethics and virtue-based principles in evaluating whether financial information faithfully represents economic phenomena.

Accepted Answer

Ethics and virtue-based principles play

The 2012 Global Fraud Survey of the ACFE points to the need for management to "walk the talk" of ethics by:

Explain the difference between global fraud, bribery, and illegal acts. What standards exist on a global level to combat these problems?

A study by the SEC notes that imperfections exist when standards are established on either a rules-based or a principles-based basis only. The SEC recommends that standards should have all of the following characteristics except:

The following is a similarity between the AICPA Code of Professional Ethics and the IFAC Code:

The SEC study of a principles-based system identifies each of the following characteristics that should guide standards setting except for:

A "secret" or "hidden" reserve can occur when a company does one or more of the following

The Global Survey on Business Ethics reports each of the following results except for:

The comply or explain principle refers to:

According to CLSA Corporate Governance Watch 2012:

Explain the relationship between Gray's accounting values and Hofstede's cultural values. Give an example of how these values are related in a particular country of your choice except the U.S.

The 2012 Global Fraud Survey conducted by the ACFE identifies each of the following efforts to combat global fraud except for:

The UK Bribery Act establishes six principles to guide adequate procedures to deal with bribery including:

The Serious Frauds Office in the UK identified each of the following as a "red flag" indicating corruption may exist except for:

Explain why you think the authors of studies cited in the text were concerned about whether a principles-based approach to standard setting might lead to earnings management.

Good ethics is important on a global level because

The reason some people are concerned about the possibility for earnings management under IFRS is:

The rules under IFRS for property, plant, and equipment differ from U.S. GAAP because:

Explain the role of ethics and virtue-based principles in evaluating whether financial information faithfully represents economic phenomena.

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Creating an Ethical Organization Environment and Effective Corporate Governance Systems

Aicpa Code of Professional Conduct

Fraud in Financial Statements and Auditor Responsibilities

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management and the Quality of Financial Reporting

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Exam 8: International Financial Reporting: Ethics and Corporate Governance Considerations

The 2012 Global Fraud Survey of the ACFE points to the need for management to "walk the talk" of ethics by:

Explain the difference between global fraud, bribery, and illegal acts. What standards exist on a global level to combat these problems?

A study by the SEC notes that imperfections exist when standards are established on either a rules-based or a principles-based basis only. The SEC recommends that standards should have all of the following characteristics except:

The following is a similarity between the AICPA Code of Professional Ethics and the IFAC Code:

The SEC study of a principles-based system identifies each of the following characteristics that should guide standards setting except for:

A "secret" or "hidden" reserve can occur when a company does one or more of the following

The Global Survey on Business Ethics reports each of the following results except for:

The comply or explain principle refers to:

According to CLSA Corporate Governance Watch 2012:

Explain the relationship between Gray's accounting values and Hofstede's cultural values. Give an example of how these values are related in a particular country of your choice except the U.S.

The 2012 Global Fraud Survey conducted by the ACFE identifies each of the following efforts to combat global fraud except for:

The UK Bribery Act establishes six principles to guide adequate procedures to deal with bribery including:

The Serious Frauds Office in the UK identified each of the following as a "red flag" indicating corruption may exist except for:

Explain why you think the authors of studies cited in the text were concerned about whether a principles-based approach to standard setting might lead to earnings management.

Good ethics is important on a global level because

The reason some people are concerned about the possibility for earnings management under IFRS is:

The rules under IFRS for property, plant, and equipment differ from U.S. GAAP because:

Explain the role of ethics and virtue-based principles in evaluating whether financial information faithfully represents economic phenomena.

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Creating an Ethical Organization Environment and Effective Corporate Governance Systems

Aicpa Code of Professional Conduct

Fraud in Financial Statements and Auditor Responsibilities

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management and the Quality of Financial Reporting

Filters