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ACCOUNTING
ACCOUNTING ETHICS FINAL
| Question | Answer |
|---|---|
| Individuals that ignore the moral point of view and take advantage of others in an effort to meet their own short-term objectives can be classified as: | Egoists |
| The cultural value of Individualism reflects: | The degree a society reinforces individual or collective achievement |
| Jane finds a material misstatement while auditing. Her senior tells her to ignore the misstatement. Jane wants to be viewed as a team player in order to advance ignores the misstatement. Which ethical theory did Jane use to make her decision? | Egoism |
| The motive of "duty" is most associated with _________. | Deontology |
| Deontology deals with: | Rights of others and duties toward them |
| Under the IMA's standards of ethical practice, an accounting professional can consider authorities or individuals not employed by the organization when an ethical dilemma occurs about an accounting/ fin reporting matter that remains unresolved if he/she: | Believes there is a clear violation of the law |
| Ethical relativism can best be described as a: | Point of view that morality is relative to the norms of one's culture. |
| Which of the following characteristics does NOT describe the behavior of Cynthia Cooper in the WorldCom fraud? | conformity |
| A danger of situational ethics is that it can be used to rationalize a wrong-doing. Such rationalizations may be seen in all of the following examples except: | David Walker’s actions at the Government Accountability Office |
| The relationship between legal and ethical can best be expressed as: | Ethical behavior requires us to do more than required by the law and less than the law allows |
| The most important duty of public accounting is to the: | Investing public |
| Decisions that are made based on the underlying circumstances of a particular matter can be best characterized by: | Situational Ethics |
| In Thomas Jones' model of moral intensity it can be said about accounting that: | The link between social consensus and ethical decision making exists because accounting is a community with shared values and beliefs |
| An example from the book of someone who may have experienced cognitive dissonance is: | Betty Vinson |
| Assume you were assigned a term paper and decided to surf the web to identify a provider of papers for a fee. You chose what you thought was the best paper available. With respect to Rest's model of morality it can be said that: | your actions lack moral sensitivity |
| The ethical dilemma for Ricardo in the Juggyfroot case can best be described as: | Whether to let his failure to object to inappropriate accounting in the prior year influence whether he goes along with inappropriate accounting in the current year. |
| In the Racially Charged Language case, which of the following is not one of the EDI initiatives discussed in the case: | Allow flyers using racial slurs |
| What should be the first step in decision making when faced with an ethical dilemma? | Get the facts surrounding the problem |
| In the "Heinz and the Drug" case described in the chapter, if Heinz was reasoning at stage 5 he might decide to steal the drug based on which of the following reasoning? | Heinz should steal the medicine, because everyone has a right to live, regardless of the law. |
| In the A Team Player case discussed in the chapter, which is the primary reason and rationalization that Barbara may need to counter for not informing Jessica of the inventory deficiency? | The inventory deficiency is immaterial. |
| Steve is under pressure to report high earnings. He takes one $600 and $900 expenditure, adds them together, and records a capital expenditure for $1,500. Which of the following reasons and rationalizations might Steve use for his action: | materiality |
| The ethical conflict Alex is facing in the FDA Liability Concerns can be best characterized as: | Alex wants to do the right thing by consumers of his salad oil products but Michael objects based on his cost benefit analysis. |
| James Rest's model of ethical action involves four components inherent to the ethical decision-making process. Which of the following relates to a person's moral judgment of what ought to be done? | Outcome of one's prescriptive reasoning |
| client asks his acct ignore a mistake overstated the ar. The acct decides that the ar account has to be corrected to state the correct amt based on the current acct rules. Which stage of Kohlberg' Stages of Moral Development is the accounting reasoning? | stage 4 |
| In his evaluation of Kidder's model, Johnson points out that: | It is not easy to determine who has responsibility for solving a problem |
| Section 301 of the Sarbanes-Oxley Act requires | The establishment of procedures to accept employee complaints |
| Which of the following is least likely to be used by a manager to set the right tone to foster ethical leadership? | Make decisions that do not harm others |
| The ACFE found that the most common way that fraud is first detected is: | tip |
| An example of revenue overstatement is: | Recording gross, rather than net, revenue |
| Jodie Fisher's allegations of sexual harassment are made believable due to Mark Hurd's: | conflicts of interests Misuse of company assets Inaccurate expense reports |
| Which of the following is NOT an element of internal control over financial reporting? | Developing a code of conduct and whistle-blowing procedures |
| With respect to the importance of moral issues in business, Thomas Jones posited that: | Moral issues of high intensity are more pronounced than those of low intensity |
| What are the five elements of the framework for understanding ethical decision making in business? | Ethical issue intensity; individual factors; organizational factors; opportunity; and business ethics intentions, behavior, and evaluations. |
| In the Pinto case, Ford relied on which approaches to ethical reasoning to decide on a course of action with respect to the faulty gas tank placement: | Ethical legalism and utilitarianism |
| According to the ACFE survey, the most common type of occupational fraud scheme is: | Asset misappropriation |
| The Full Disclosure: The Case of a Morally Challenged AP clerk involves the issue of: | Embezzling money by processing fictitious invoices |
| Which of the following is NOT a component of an effective internal control environment in COSO Internal Control - Integrated Framework? | Risk abatement |
| The Tax Shelters case deals with: | Changing culture in the tax department of a CPA firm |
| Which of the following statements best reflect the ethical obligation of CPAs with respect to working with outside advertising agencies to market professional services for the CPA? | Make sure the agency does not do anything that would put you in violation of the ethics rules |
| The SEC's position on independence can best be characterized as: | Proscribing certain business relationships with the client |
| The PCAOB was formed and instituted a mandatory quality inspection program. What has been the average audit deficiency rate range since the program started? | 30 to 40% |
| On July 1, 2015, the SEC charged Deloitte & Touche with violating auditor independence because: | Its consulting affiliate kept a business relationship with a trustee serving on the board of three funds Deloitte audited |
| The SEC approach to independence emphasizes independence in fact and appearance in all of the following ways except: | Whether a conceptual framework approach is used for evaluating ethics violations |
| A common requirement/effect of the commissions and contingent fees rule is: | A CPA is prohibited from accepting such a form of payment when engaged in attest services for a client |
| Which of the following is NOT something the CPA should do in tax planning? | Uncritically accept the client's explanations for assumptions and representations |
| Under the Sarbanes-Oxley Act, the auditor's responsibility with respect to internal controls can best be stated as: | Assess management's report on internal controls |
| The tendency for decision-makers to put more weight on information that is consistent with their initial beliefs or preferences is called the: | Confirmation tendency |
| The House Subcommittee on Oversight and Investigations made its recommendations after looking into failures at each of the following companies except: | enron |
| The confidentiality standard in the AICPA code provides a blanket exception to the rule in each of the following situations except: | In response to a successor auditor's request |
| An example of a self-review threat is: | Preparing source documents used to generate the client's financial statements |
| In gathering audit evidence, the accessibility of information may be a factor thereby influencing which judgment trigger? | availability |
| The primary accounting issue in the Wetherford International case is: | Fraudulent inflation of earnings using deceptive income tax accounting |
| Which of the following is not part of the fraud triangle? | materiality |
| The Committee of Sponsoring Organizations of the Treadway Committee (COSO) analyzed the financial reporting of public companies during the 1998-2007 periods when business failures due to accounting fraud were high and found that: | Top management was frequently involved in the fraud with the CEO and/or CFO being the most frequently involved |
| In the Loyalty and Fraud Reporting case, Ethan Lester pressured his friend Vick Jensen to: | Cover up Ethan's fraud |
| The framework of COSO's Enterprise Risk Management can best be characterized as: | Incorporate enhanced corporate governance into internal control principles |
| An example of fraudulent financial statements is: | Misrepresentation of events, transactions, and other significant events in the financial statements |
| Which of the following is the most likely reason for an auditor to issue a modified opinion with a qualification? | Misstatements that are material but not pervasive |
| The difference between errors in the financial statements as compared to fraud is: | Fraud is always an intentional act designed to deceive another party |
| In Grant Thornton v. Prospect High Income Fund, Grant used each of the following points to defend itself against legal liability except: | There was no evidence of the loss suffered by the plaintiffs |
| In the U.S., if the auditor can demonstrate having performed services with the same degree of skill and judgment possessed by others in the profession, it can be said to have exercised: | due care |
| A defendant is liable for injuries when he acted with willfulness. Another term for willfulness is: | intent |
| The "particularity" provision in the PSLRA allows a plaintiff to: | Assert scienter |
| The name of the term used to describe deficiencies in internal control over financial reporting where there is a reasonable possibility that a material misstatement will not be detected on a timely basis is called: | material weakness |
| Which of the following is NOT one of the most relevant sources of civil liabilities for auditors charged with failing to adhere to the requirements of the laws in carrying out professional obligations? | Private Securities Litigation Reform Act of 1995 |
| In the case of Phar-Mor v. Coopers & Lybrand the auditors were found guilty of fraud because | The auditors were grossly negligent and had a blatant disregard for the truth |
| Which of the following elements do NOT have to be proved once a plaintiff has established the ability to sue under rule 10b-5? | Error by auditor led to plaintiffs' loss |
| In establishing that the third party relied on the financial statements, one factor that works against plaintiffs' establishing such reliance is: | Damages or loss suffered by the plaintiff would have occurred regardless of whether the audited financial statements were misstated |
| Under section 302 of the SOX the financial statement certifying officials must include in their certification that: | A list of all deficiencies in the internal controls and information on any fraud that involves employees who are involved with internal activities has been created |
| In the Vertical Pharmaceuticals case, Deloitte & Touche was sued because: | Vertical claimed the firm's false accusations of fraudulent conduct led to the withdrawal of another public company's planned acquisition of Vertical |
| Under the Securities Act of 1933, if damages were incurred and there was a material misstatement or omission in the financial statements, the CPA will most likely lose the lawsuit unless: | The CPA rebuts the allegations |
| In the Miller Energy Resources case, the SEC found that: | Held the auditors liable because they failed to gather sufficient, competent evidential matter to assess the value of assets on the financial statements. |
| Needles suggests that making judgments about what earnings management is becomes difficult because: | There is no clear limit beyond which a choice is clearly unethical |
| Which of the following was not an accounting issue in the Sunbeam case? | Swap transactions |
| Which of the following was not pointed to by the SEC as a motivation for fraud in the Xerox case? | Xerox top management overrode the internal control to manipulate earnings |
| Which of the following was NOT one of the schemes used by Beazer Homes to manipulate its earnings? | Recording revenue from roundtrip transactions prematurely |
| work for a co that always pushes the envelope w/ respect to reporting revs and exp. often disagree w/the company bc its approach to reporting these amts cannot be justified from a GAAP perspective. Which best characterizes the ethical issues of concern? | Ethical Dissonance |
| All of the following are examples of "Recording revenue too soon or of questionable quality" except: | Recording sales that lack economic substance |
| A common method used to smooth net income over time is: | Using accrual of operating expenses and future adjustments |
| All of the following are examples of "Boosting Income with One-Time Gains" except: | Recording sales that lack economic substance |
| Kelly/Jordan are writing paper together on the concept of "faithful representation" in the fin statements. Kelly is assigned the task of defining it in the context of an amt being an est. of the following statements NOT be used by Kelly in her des? | Good faith attempt to gather evidence to support the amount |
| Each of the following is a finding of a survey of CFOs about their perceptions of earnings quality except: | Each of the following is a finding of a survey of CFOs about their perceptions of earnings quality except: |
| Which of the following is NOT a qualitative factor when assessing materiality? | The use of simplistic numerical thresholds and rules of thumb |
| Which of the following was not true according to the Enron case? | Fastow developed the concept of buying up oil and gas companies to establish SPEs |
| The Blackswan PetFood case deals with: | Using non-GAAP measures of earnings |
| Which of the following is NOT required of management under Section 302 of the SOX? | Assess each internal control deficiency's impact on the audit report |
| The SEC requires stealth restatements to be: | Disclosed only in an 8-K report or amended 10-K/A or 10-Q/A |
| Which of the following authors(s) focus(es) on "management's intent to deceive the stakeholders by using accounting devices to positively influence reported earnings?" | Healy and Wahlen |
| "Cookie jar reserves" can best be described as: | Overstating or understating allowances and reversing amounts in the future to smooth out net income over time |
| Which technique was used by both WorldCom and Waste Management to manage earnings? | Manipulating asset net valuation amounts to minimize operating expenses for a period |
| What was the original motivation by FASB on SPEs? | To establish a mechanism to encourage companies to invest in needed assets while keeping related debt of its books |
| Accruals that are based on estimated changes in fundamental economic performance of the firm are: | Nondiscretionary accrual |
| Which of the following has NOT been found to be a measure of a non-GAAP financial metric? | Earnings before depreciation and amortization |
| An unusual aspect of the Green Mountain case is it included: | Conference calls that provided earnings guidance to shareholders and analysts were used to mask a financial fraud |
| With respect to leadership in the accounting profession, it might be said that: | Partners must exhibit moral imagination through ethical perception of what it means to be ethical, professional, and successful |
| Servant leaders: | Help followers to fulfill their needs by modeling ethical values, attitudes and behaviors |
| The Ethical Leadership Scale developed by Kelly and Early identify each of the following measures of leadership: | Personal ethical competence, ethical leadership, and ethical organization |
| Ponemon hypothesized that there is a correlation between: | Organizational culture and subordinates' personal characteristics and decision-making styles |
| Ethical leadership failure can be caused by: | Lines of communication are blurred Ignoring ethical boundaries within a company Incorrect Organizational factors promote unethical action |
| To hold employees accountable to ethical standards, moral managers: | Use reward systems to encourage ethical performance |
| Each of the following is a factor that needs to be evaluated for moral intensity except: | Magnitude of consequences of the moral act Degree of social consensus that the moral act is unethical Feelings of proximity of the moral agent to the moral act |
| Leadership in accounting is different than leadership in most other organizations because: | Accountants are expected to place the public interest above all else |
| Bobek et al. found a disconnect between tax partners and nonpartner tax practitioners with respect to: | Perceptions of organizational ethics when they described a self-identified ethical dilemma |
| According to Mesmer-Magnus and Viswesvaran, organizational employees have three options to address an unsatisfactory situation faced within an organization. These include: | Exit the organization, remain silent, voice discontent |
| The results of Morris's study of the influence of authentic leadership and ethical firm culture on auditor behavior is: | A significant negative correlation exists between authentic leadership and dysfunctional audit behaviors |
| Bobek et al. found that nonpartners are more likely to perceive the ethical environment of their firm as strong when they: | Believe they have a meaningful role in shaping and maintaining the ethical environment of their firms |
| Taylor and Curtis found from their study of whistleblowing among public accounting seniors that: | Moral intensity affects the intention to report wrongdoing |
| The leadership style of management at Krispy Kreme can best be summed up as: | Aggressively sought to manage earnings using round-trip transactions |
| An authentic leader: | Is focused on building long-term shareholder value, not in just beating quarterly estimates |
| The Giving Voice to Values framework distinguishes between organizational and individual values because: | Organizational values are highly visible within the organization while individual values are internal to the very core of individuals |
| A unique aspect of the story of ethical leadership illustrated by Diem-Thi Le is that: | Le's working papers were altered by her supervisor |
| The KPMG tax shelter case deals with: | The culture of the tax practice and aggressive marketing of tax shelters to wealthy clients |
| The ethical dilemma in the Research Triangle Software Innovations case can best be summed up as: | Is it appropriate to select an audit client's ERP software for a different advisory services client? |
| The ethical environment within an accounting firm is created through adherence to the: | Stated values and management practices |
| In accounting, building a reputation for ethical leadership means to: | Enable ethics and values to shine through the fog of beating the competition and meeting financial projections |
| In Brennan and Kelly's study of the factors that influence propensity or willingness to blow the whistle among audit trainees, the authors identified each of the following factors except: | Audit firm ethical leadership |
| To be an ethical leader, executives must also: | Attend to cultivating ethics and be an ethical person |
| Social Learning Theory holds that: | Employees learn what to do and what not to do by observing their leaders' behavior and its consequences |
| With respect to ethical leadership, the issue in the General Electric case can best be characterized as: | The leadership style of the executives and culture of the company |
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