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Ethics for Accountants > Final Exam > Flashcards

Final Exam Flashcards

1
Q

To whom does the management owe its ultimate allegiance?
a. Employees
b. Creditors
c. Shareholders/Stakeholders
d. Government

A

c. Shareholders/Stakeholders

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2
Q

An individuals personal rights are more important than those of an employer, unless the employer’s interest is:

A

reasonable, legitimate, morally acceptable

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3
Q

By which means were most frauds reported or discovered, according to the survey conducted by ACFE (Association of Certified Fraud Examiners)?
a. Internal Audit
b. Management Review
c. External Audit
d. Tips

A

d. Tips

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4
Q

Why is it necessary to use the Integrating Philosophical and Stakeholder Impact Analysis?
a. To make sure the stakeholders aren’t losing a lot of profit
b. So you can consider everyone who might be at risk depending on your decision
c. For a comprehensive analysis of an ethical decision
d. So you can identify all the facts of a certain situation

A

c. For a comprehensive analysis of an ethical decision

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5
Q

What is the primary goal of corporate/Board of Directors governance?

A

Balancing the interests of stakeholders

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6
Q

What course of action is optimal in crisis management?

A

Make decisions quickly
Focus attention on crisis
Shorten the uncontrollable phase
Decisions should benefit ALL stakeholders and enhance organization’s reputation

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7
Q

What regulatory agency has been created to monitor SEC reporting by certified public accountants after 2002?

A

PCAOB

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8
Q

One ethical dilemma for professional accountants is a conflict between the interests of a stakeholder. Who or what is a stakeholder?
a. Everyone but the people within the company
b. People who are affected by the outcomes of decisions that are made
c. Supervisor of an accountant
d. Employees only

A

b. People who are affected by the outcomes of decisions that are made

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9
Q

Moral sensitivity can be summarized as?
a. Being able to think of others first
b. Being able to identify the best course of action
c. Being able to identify an ethical situation
d. Being able to react quickly

A

c. Being able to identify an ethical situation

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10
Q

What issues are required in implementing a Code of Conduct in an organization?

A

deals with principles plus additional examples, etc
Values are the most important part of this

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11
Q

According to Kohlberg’s stages of moral development, what happens at stage 1?

A

Obedience of Rules; Avoidance of punishment

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12
Q

Which of the following is not an influences on ethical decision making?

A

Influences: personal moral philosophy, stage of moral development, motivation, and other personal factors such as gender, age, and experience
Not an influence: upbringing

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13
Q

Which of the following is NOT a factor in the ethical decision-making model?
a. individual factors
b. employee benefits packages
c. organizational factors
d. ethical issue intensity
e. opportunity

A

b. employee benefits packages

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14
Q

Shortfalls of todays ethics programs:

A

Lack of strong CEO involvement
Insufficient training
Failure to renew employee commitment to the code annually
Lack of communications and meetings that deal with ethics
Lack of formal program follow-through
Failure to create investigation follow-up and sanction process

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15
Q

Which one of the Stakeholder Impact analysis & Decision-Making Approaches sets Ground Rule, End-Point, Rule and Social Contract Ethics?

A

Pastin’s Approach

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16
Q

Which of the following best states how Rawl’s would argue for situations in which?

A

inequalities exist, that the least advantaged person must end up better off than before

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17
Q

CPAs in accounting for public practice provides numerous accounting and financial services, attest, tax, and management advisory services. Other members prepare financial statements in the employment of others, perform internal auditing services, and serve in financial and management capacities in industry, education, and government, Regardless of service and capacity, what should members do at all times?

A

Protect the integrity of their work, maintain objectivity, and avoid any subordination of their judgement

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18
Q

The best sources for ethical guidance are?

A

Standard Setters (IFAC, PCAOB, FASB, IASB); GAAP; GAAS; SEC, OSC, NYSE, Court Decisions

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19
Q

What course of action should a CPA in public accounting do when confronted with a situation where his competence or skill level is not strong enough and not experienced enough to perform the accounting related service (due care question)?

A

Recommend another practitioner/CPA with the competency to handle the services

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20
Q

Which theory is based on the way you live your life/the kind of person you are?
a. Deontology
b. Virtue ethics.
c. Teleology
d. Egoism

A

b. Virtue ethics.

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21
Q

How did Minkow of ZZZ Best, stay under Ernst & Whinney’s radar?
a. Threatened to take away his business and give it to other auditors
b. Clamied a random half-constructed building as one of ZZZZ bests restorations jobs
c. Got on the auditors’ good side by inviting them to his house to wine and dine
d. All of the above

A

d. All of the above

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22
Q

At what level of Kohlberg’s Stages of moral Development is an individual self centered?

A

Level 1 - Pre-conventional Moral Development

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23
Q

How did MCI allow Walt Pavlo to commit fraud?
a. They trusted him
b. Unethical tone at the top
c. Weak internal controls
d. All of the above.

A

d. All of the above.

24
Q

What is the most important factor in encouraging employees to observe ethical guidelines?
a. Compliance-based
b. Value-based
c. Achievement based
d. Stakeholder-based
e. Externally oriented

A

b. Value-based

25
Q

Under the AICPA Code of Preofessional Conduct, which of the following is correct to be independent in fact and appearance when discharging professional responsibilities?
a. All CPAs.
b. A CPA in public practice providing auditing and other attestation services.
c. A CPA in public practice providing tax and management advisory services.
d. A CPA not in public practice.

A

b. A CPA in public practice providing auditing and other attestation services.

26
Q

Which of the following is NOT a Universal Hypernorm?
a. Honesty.
b. Compassion.
c. Predictability.
d. Performance.
e. Fairness.

A

d. Performance.

27
Q

What are the Universal Hypernorms?

A

Honesty, Fairness, Compassion, Integrity, Predictability, Responsibility (HFCIPR)

28
Q

From which perspective one might be able to rationalize the ethics of earnings management?
a. From a virtue perspective
b. From an egoistic perspective
c. From a rights perspective
d. From an ethical perspective

A

b. From an egoistic perspective

29
Q

What are the four pillars of Corporate governance?
a. Respect, accountability, fairness and transparency.
b. Responsibility, accountability, firmness and transparency.
c. Responsibility, accountability, fairness and transparency.
d. Respect, accountability, firmness and transparency.

A

c. Responsibility, accountability, fairness and transparency.

30
Q

Which actual event led to the Tyco fraud discovery?
a. A researcher issued a report criticizing Tyco’s accounting principles
b. SEC launched an investigation on Dennis Kozlowski for tax evasion
c. External Auditors wrote a qualified opinion audit report
d. None of the above

A

b. SEC launched an investigation on Dennis Kozlowski for tax evasion

31
Q

Rests components of moral model include all but:
a. Moral sensitivity
b. Moral development
c. Moral judgment
d. Moral character
e. Moral motivation

A

b. Moral development

32
Q

Deontologists focus on:
a. The obligations or duties motivating a decision or actions rather than on the consequences of the actions.
b. Maximizing the utility produced by a decision
c. The motivating aspects of moral character demonstrated by decision makers
d. Those character traits that dispose a person to act ethically

A

a. The obligations or duties motivating a decision or actions rather than on the consequences of the actions.

33
Q

Which of the following is NOT an earnings management technique?
a. Failing to write down or write of impaired assets
b. Releasing questionable reserves into income
c. Failing to record expenses and related liabilities when future obligations remain
d. Creating an allowance for uncollectible accounts and adjusting it at year end

A

d. Creating an allowance for uncollectible accounts and adjusting it at year end

34
Q

Aristotle defined ______ as a trait of character manifested in habitual action:
a. Virtue
b. Ethics
c. Morals
d. None of these

A

a. Virtue

35
Q

What major fraud scandal did Parlamat create and was eventually uncovered?
a. A fictitious BOA account in the Cayman Islands of 5 billion dollars not initially recognized by the auditors because bank confirmations were confiscated by employees, forged, and returned to the auditors
b. AR kitting of 3 billion $
c. Filing a false petition with the italian securities exchange commission
d. By winning a lawsuit with exempted them from following the Draghi law

A

a. A fictitious BOA account in the Cayman Islands of 5 billion dollars not initially recognized by the auditors because bank confirmations were confiscated by employees, forged, and returned to the auditors

36
Q

What was Helen Sharkey’s failure as a CPA at Dynegy?

A

Not going to the external auditor, not contacting the proper authorities, not seeking legal advice

37
Q

Enrons Andy Fastow and many cases from that era rationalized and embraced unethical financial decisions because of:
a. The CEO, COO, the Board, CPAs & the legal team approved
b. It was immaterial
c. It was a time when other firms were doing the same and Enron lead the charge
d. It was rewarded and recognized
e. All of the above

A

e. All of the above

38
Q

What is the most important act to follow when CPA’s or anyone is faced with a situation where unethical decisions in accounting are present?

A

Express concerns to supervisor; Bring concerns to higher levels
Consider: Continued employment, Responsibilities to external auditors, Responsibilities to outsiders
Seek legal advice

39
Q

Which theory is based on doing what’s right despite the consequences?
a. Deontology
b. Virtue ethics
c. Teleology
d. Egoism

A

a. Deontology

40
Q

_______ focuses on the character or integrity of the moral actor and looks to moral communities, such as professional communities, to help identify ethical issues and guide ethical action.

A

Virtue Ethics

41
Q

Many critics say the biggest fault with utilitarianism is that it:

A

Is impossible to foresee and measure all consequences

42
Q

Many critics say the biggest fault with Deontological theories is:
a. no clear way to resolve conflicts between moral duties
b. the separation of consequences from duties
c. the requirement to respect people as human beings
d. not being able to treat people as only a means

A

a. no clear way to resolve conflicts between moral duties

43
Q

Which one of the following most correctly describes a Utilitarian approach to ethical decision making?

A

Greatest good for the greatest number

44
Q

________ is the critical value added by professional accountants in the newer assurance services as well as traditional ones.

A

Credibility

45
Q

Which is not a practical approach to decision making? Any answer not including

A

Five Question Approach, Moral Standards Approach, Pastin’s Approach

46
Q

The following are questions that are included in the 5-Question Approach except for: Is it ________ ?

A

Profitable
Legal
Fair
Right
Going to Further Sustainable Development

47
Q

WorldCom overstated their profit by doing which of the following?
a. Understated depreciation expenses
b. Capitalized operating expenses
c. Overstated Assets
d. Made up Investment profits

A

b. Capitalized operating expenses

48
Q

Michael Josephson, founder of the Josephson Institute of Ethics, is credited for the Pillars of Character. Describe the best answer below.

A

Trustworthiness, Respect, Responsibility, Fairness, Caring, Citizenship (TRRFCC)

49
Q

Corporate reputation is based on what 4 determinants?

A

Trustworthiness, credibility, reliability, responsibility (TCRR)

50
Q

Common pitfalls with the use of an ethical decision making model?

A

Focus on short-term profit and shareholder only impacts
Focus only on legalities
Limits to fairness
Limits to scrutinizing all stakeholder rights
Conflicts of interest
Interconnection of stakeholders
Failure to identify all stakeholder groups
Failure to rank specific interests of stakeholders
Exclusion of well-offness, fairness, or rights
Failure to consider the motivation for the decision
Failure to consider virtues expectations

51
Q

Egoists maintain a general principle of the following sort:
a. “One ought always act in others’ interest”
b. “One ought always act in one’s and others’ interests”
c. “One ought always act in peer group’s interest”
d. “One ought always act in one’s own interest”

A

d. “One ought always act in one’s own interest”

52
Q

What is the primary fiduciary obligation of the board of directors?
a. Maximize profits for the company and its shareholders
b. Give excessive executive compensation
c. Safeguard the organization’s resources and interests of the company’s stakeholders
d. Allow high risk accounting practices

A

c. Safeguard the organization’s resources and interests of the company’s stakeholders

53
Q

When applying Utilitarianism to judge actions, what is the only thing that matters?
a. Motives
b. Justice
c. Consequences
d. Rights

A

c. Consequences

54
Q

What are ethics risks?

A

The risks of failing to meet the expectations of stakeholders

55
Q

Aristotle emphasized which 4 virtues?

A

Wisdom, Courage, Temperance, Justice (WCTJ)

56
Q

What document did Arthur Andersen propose to Waste Management to cover the accounting irregularities and to address these irregularities later?

A

Summary of Action Steps

Ethics for Accountants (1 decks)

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