Question 1

Which of the following statements is true of the Sarbanes-Oxley Act?

Accepted Answer

A) It is also known as the Financial Services Modernization Act of 2002. 
B) It is enforced by the Financial Accounting Standards Board. 
C) It was passed by Congress because corporate boards failed to police themselves. 
D) It fails to provide oversight in terms of direct lines of accountability and responsibility.

Question 2

Risk assessment and ongoing monitoring are elements that comprise the control structure of the Sarbanes-Oxley Act.

Accepted Answer

A) True 
 B)False

Question 3

What are the ethical responsibilities of board members?

Accepted Answer

The answer of What are the ethical responsibilities of board...

Question 4

_____ is a voluntary collaboration designed to improve financial reporting through a combination of controls and governance standards called the Internal Control-Integrated Framework.

Accepted Answer

The answer of _____ is a voluntary collaboration designed to...

Question 5

Section 404 of the Sarbanes-Oxley Act addresses the:

Accepted Answer

A) rules of professional responsibility for attorneys. 
B) codes of ethics for senior financial officers. 
C) management assessment of internal controls. 
D) services outside the scope of auditors.

Question 6

A large boost in share price decreases a firm's equity leverage for external expansion.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following duties of board members suggests that conflicts of interest are always to be resolved in favor of the corporation?

Accepted Answer

A) Duty of care 
B) Duty of good faith 
C) Duty of candor 
D) Duty of loyalty

Question 8

_____ of the Sarbanes-Oxley Act addresses the disclosure of audit committee financial expert.

Accepted Answer

A) Section 404 
B) Section 301 
C) Section 407 
D) Section 307

Question 9

Identify the gatekeepers who function as intermediaries between a company's stockholders and its executives.

Accepted Answer

A) Accountants 
B) Auditors 
C) Board of directors 
D) Financial analysts

Question 10

What is insider trading?

Accepted Answer

The answer of What is insider trading?...

Question 11

_____ refers to cultural issues such as integrity, ethical values, competence, philosophy, and operating style.

Accepted Answer

The answer of _____ refers to cultural issues such as...

Question 12

Identify the gatekeepers who evaluate a company's financial prospects or creditworthiness, so that banks and investors can make informed decisions.

Accepted Answer

A) Investors 
B) Attorneys 
C) Auditors 
D) Analysts

Question 13

Which of the following exemplifies insider trading?

Accepted Answer

A) Underreporting income 
B) Falsifying account documents 
C) Misappropriation of proprietary knowledge 
D) Illegally evading income taxes

Question 14

According to Kevin Bahr, which of the following is a cause for conflicts in the financial markets?

Accepted Answer

A) The independence and lack of expertise of audit committees 
B) The presence of shareholder activism 
C) Long-term executive greed versus short-term shareholder wealth 
D) Self-regulation of the accounting profession

Question 15

Discuss the conflicts surrounding accounting practices.

Accepted Answer

The answer of Discuss the conflicts surrounding accounting practices....

Question 16

Which of the following is true of Federal Sentencing Guidelines for boards?

Accepted Answer

A) The board must be knowledgeable about the objectives and process of the ethics program rather than simply the mere contents of a training session. 
B) The board should avoid exercising reasonable oversight with respect to the effectiveness and implementation of the ethics program. 
C) The board should leave the evaluation of all board policies, procedures, governance structure, and position descriptions to the executives. 
D) The board need not work with executives to analyze the incentives for ethical behavior.

Question 17

COSO developed _____ to serve as a framework for management to evaluate and improve their firms' prevention, detection, and management of risk.

Accepted Answer

The answer of COSO developed _____ to serve as a...

Question 18

Explain the Federal Sentencing Guidelines for boards.

Accepted Answer

The answer of Explain the Federal Sentencing Guidelines for boards....

Question 19

Which of the following elements of COSO refers to policies and procedures that support the cultural issues such as integrity, ethical values, competence, philosophy, and operating style?

Accepted Answer

A) Ongoing monitoring 
B) Information and communications 
C) Control activities 
D) Risk assessment

Question 20

Which of the following rely on gatekeepers for fair and effective functioning of economic markets?

Accepted Answer

A) Bankers 
B) Auditors 
C) Accountants 
D) Financial analysts

Exam 10: Ethical Decision Making: Corporate Governance, Accounting, and Finance