Corporate Governance and Ethics
Final Test Solutions
Course Introduction
Corporate Governance and Ethics explores the systems, principles, and processes by which companies are directed and controlled, emphasizing the roles and responsibilities of boards of directors, management, and stakeholders. The course examines frameworks for effective governance, legal and regulatory requirements, and mechanisms for accountability and transparency. A significant focus is placed on ethical decision-making, codes of conduct, and the challenges of balancing stakeholder interests. Case studies and real-world examples illustrate how ethical considerations and strong governance contribute to organizational success, reduce risk, and build public trust in the corporate sector.
Recommended Textbook
Ethical Obligations and Decision Making in Accounting Text and Cases 2nd Edition by Mintz
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8 Chapters
609 Verified Questions
609 Flashcards
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Chapter 1: Ethical Reasoning Implications for Accounting
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) The ancient Greeks thought of the virtues as characteristics of behavior that:
A)Could lead to a good life
B)Make up the "six pillars of character"
C)Support the rights theory
D)All of the above
Answer: A
Q2) When an employee is given a job evaluation, he has a right to expect
A)Fair, but honest evaluations
B)Glowing reports
C)360 degree evaluations from everyone in the firm
D)Evaluations of technical, not personal skills
Answer: A
Q3) Assume you are taking an exam and you see that your friend is cheating.Your professor does not notice it.What should you do if you are ethical person?
A)You pretend not to know it.
B)You tell your professor immediately.
C)You also cheat the exam because your friend does.
D)You talk to the friend and advise him or her to confess.
Answer: B
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Page 3
Chapter 2: Accountants Ethical Decision Process and Professional Judgment
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72 Verified Questions
72 Flashcards
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Sample Questions
Q1) The ethical decision making model described in the chapter helps to:
A)Organize the various elements of ethical reasoning and professional judgment
B)Evaluate stakeholder interests using ethical reasoning
C)Identify and select alternative courses of action
D)All of the above
Answer: D
Q2) The need to exercise professional skepticism in auditing can be linked to:
A)Maintaining an attitude of independence in decision making
B)Considering and responding to the risk of material misstatement in the financial statements due to fraud
C)Considering and responding to pressures that might be imposed on auditors in decision making
D)All of the above
Answer: B
Q3) In the case of Better Boston Beans, what is the ethical dilemma facing Cindie?
A)Loyalty of co-worker versus trust of co-worker.
B)Trust of co-worker versus honesty of the workplace.
C)Honesty of the workplace versus privacy of an individual.
D)Privacy of an individual versus loyalty of co-worker.
Answer: B
Page 4
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Chapter 3: Corporate Governance and Ethical Management
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80 Verified Questions
80 Flashcards
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Sample Questions
Q1) A school district decided to add an ethics officer to its administration.The district had watched how often the district was dealing with ethically sensitive situations.After doing research into how many organizations used an ethics officer and the desired education and background for such an officer, the district advertised for a person with the following qualifications: education in accounting, finance, or criminal justice; CPA preferred; and experience with compliance or audits.The district hired a person with a CPA license, degree in accounting and experience as an internal auditor doing compliance audits. At the press conference to introduce the new ethics officer, a local news reporter pointedly asked about the candidate's background.The ethics officer stated as a CPA he knew how to handle ethical issues and he had the highest integrity.The reporter decided to a little more background research before writing the article.The state board of public accountancy of that state maintained an online database for the public to verify that a CPA was currently licensed.When the reporter could not find the ethics officer as a currently licensed CPA, he called the district and the ethics officer for a comment. What should the district and ethics officer do? Use the ethical decision making model to defend your answer.
Answer: Answers will vary
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Chapter 4: Aicpa Code of Professional Conduct
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) Which tax service is still permitted by the PCAOB for audit clients following the KPMG tax shelter case?
A)Aggressive tax shelter for audit clients
B)Auditing of deferred taxes
C)Tax services to audit client management or family members
D)Tax services for a contingent fee
Q2) In its investigation of ZZZZ Best, the House Subcommittee on Oversight and Investigations looked into:
A)Why the board of directors failed to uncover the fraud at ZZZZ Best
B)How the company was able to create 80% or more fictitious revenue
C)How the company was able to create cookie jar reserves
D)All of the above
Q3) Which is the correct order an accountant should consider each of the following when facing a difficult decision?
A)Public, Client, Employer, Professional, Individual
B)Public, Profession, Employer, Client, Individual
C)Client, Profession, Public, Employer, Individual
D)Employer, Client, Public, Individual, Profession
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6
Chapter 5: Audit Responsibilities and Accounting Fraud
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80 Verified Questions
80 Flashcards
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Sample Questions
Q1) Adverse opinions are preceded by a separate paragraph that should contain all of the following except for:
A)Substantive alternative treatments of GAAP
B)Substantive reasons for the adverse opinion
C)Principal effect of the adverse treatment on financial position and results of operations and cash flows
D)All of the above should be included in explaining the basis for the adverse opinion
Q2) The Committee of Sponsoring Organizations of the Treadway Committee (COSO) analyzed the financial reporting of public companies during the 1987-1997 periods when business failures due to accounting fraud were high and found that:
A)Top management was frequently involved in the fraud with the CEO being the person most frequently involved
B)Top management was frequently involved in the fraud with the CFO being the person most frequently involved
C)The audit committee always sanctioned the fraud
D)A minority of audit reports issued during the fraud period contained unqualified audit opinions
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Chapter 6: Legal and Regulatory Obligations in an Ethical Framework
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73 Verified Questions
73 Flashcards
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Sample Questions
Q1) The Rosenblum case ruling was of concern to the accounting profession because it implied that
A)Full joint and several liabilities would be reinstated.
B)All possible third party users of financial statements must be anticipated.
C)The concept of contractual privity would no longer be important.
D)Financial liability would occur when scienter was a factor.
Q2) The term "manipulative" connotes
A)Gross negligence
B)Constructive fraud
C)Nonfeasance which results in investor losses
D)Intentional or will conduct designed to deceive
Q3) Auditors may be held liable to both their clients and third parties under common law.
a.What must a client prove to recover its losses from a client under common law?
b.What must an ordinary third party prove to recover losses from an auditor under common law?
c.How does an auditor's ethical obligations and liability under common law intersect?
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Page 8
Chapter 7: Earnings Management and the Quality of Financial Reporting
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66 Flashcards
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Sample Questions
Q1) The swap transactions used in the Solutions Network case to manage earnings can best be described as:
A)Going to a swap meet and capitalizing purchases instead of expensing them immediately against swap revenue
B)Recording revenue on software systems transactions in an earlier period than when obligated to buy the same in a later period
C)Using a cookie jar reserve to delay the recording of revenue into a later period
D)Recording as operating revenue on onetime gains from the sale of underperforming assets
Q2) 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."?
A)Dechow and Skinner
B)Healy and Wahlen
C)Schipper
D)Thomas
E)McKee
Q3) Explain when earnings management may be an ethical practice.
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Page 9
Chapter 8: International Financial Reporting: Ethics and Corporate Governance Considerations
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55 Verified Questions
55 Flashcards
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Sample Questions
Q1) The Norwalk agreement refers to:
A)The commitment of the U.S.and European Union to adopt one set of accounting standards
B)The commitment of FASB and the International Accounting Standards Board (IASB) to adopt one set of accounting standards
C)The commitment of FASB and IASB to the convergence of U.S.GAAP and international accounting standards
D)The agreement that ended World War II
Q2) In the SEC v.Siemens Aktiengesellschaft case, each of the following charges were made against the company's Managing Board except for:
A)The Board failed to ensure that Siemens met the U.S.regulatory and anti-bribery provisions of the Foreign Corrupt Practices Act
B)The Board failed to meet its obligations with respect to compliance procedures at Siemens
C)The Board failed to adequately supervise the auditors of Siemens
D)The Board created a corporate culture that contributed toward tolerating and even rewarding bribery
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Page 10