Ethics for Accountants
Mock Exam
Course Introduction
This course explores the fundamental principles and frameworks of ethical behavior within the accounting profession. Students will examine issues such as integrity, objectivity, professional competence, confidentiality, and professional behavior as outlined by key regulatory bodies. Through case studies, real-world scenarios, and discussion of relevant codes of conduct, the course equips future accountants with the skills to identify ethical dilemmas, make sound ethical decisions, and understand the legal and social responsibilities inherent to the profession. The course also highlights the importance of ethics in maintaining public trust and upholding the reputation of the accounting field.
Recommended Textbook
Business and Professional Ethics for Directors Executives and Accountants 8th Edition by Leonard
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160 Flashcards
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Chapter 1: Ethics Expectations
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Sample Questions
Q1) Which of the following are examples of ethics risks faced by employees?
A) honesty and integrity
B) fairness and compassion
C) integrity and responsibility
D) fairness and integrity
E) responsibility and honesty
Answer: B
Q2) Which of the following is a fundamental factor in having an effective ethical corporate culture?
A) tone at the top (i.e., ethical leadership)
B) efficient oversight by the company's Board of Directors
C) workplace ethics
D) code of conduct
E) tone at the top and workplace ethics
Answer: E
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Page 3
Chapter 2: Ethics & Governance Scandals
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Sample Questions
Q1) Which of the following demonstrated extraordinary hubris?
A) Kenneth Lay
B) Bernie Ebbers
C) Arthur Andersen
D) Scott Sullivan
E) Kenneth Lay and Bernie Ebbers
Answer: E
Q2) The U.S. Government created the Troubled Asset Relief Program (TARP) to
A) bail out investors in U.S. financial firms and institutions.
B) avoid a worldwide financial crisis.
C) stimulate the U.S. economy.
D) stimulate the U.S. economy, avoid a worldwide financial crisis, and bail out investors in U.S. financial firms and institutions.
E) make a profit on the ultimate sale assets bought at a low value.
Answer: D
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Chapter 3: Philosophers Contributions
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Sample Questions
Q1) Which theory focuses on the moral character of the decision maker?
A) deontology
B) distributive justice
C) utilitarianism
D) moral imagination
E) virtue ethics
Answer: E
Q2) Under this approach, what is important is that the decision was made for the right reasons:
A) deontology
B) distributive justice
C) utilitarianism
D) moral imagination
E) virtue ethics
Answer: A
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Chapter 4: Practical Ethical Decision Making
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Sample Questions
Q1) From a stakeholder point of view, which of the following must be satisfied for a decision to be considered ethical?
A) The decision should demonstrate virtues reasonably expected.
B) The decision should result in more benefits than costs.
C) The decision should not offend the rights of any other stakeholders.
D) The distribution of benefits and burdens should be fair.
E) All of these must be satisfied for a decision to be considered ethical.
Q2) Failure to identify all relevant stakeholder groups for a proper stakeholder impact analysis may be the result of
A) bias.
B) conforming to an unethical corporate culture.
C) conflicts of interests.
D) failure to consider the motivation for the decision.
E) All of these are correct.
Q3) What is the most common measure of shareholder well-being?
A) profit or loss
B) profit or loss plus externalities
C) profit or loss plus cost-benefit analysis
D) profit or loss plus risk-benefit analysis
E) All of these are correct.
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Chapter 5: Corporate Ethical Governance & Accountability
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Sample Questions
Q1) SOX imposed which of the following new penalties for executives?
A) fines
B) suspension
C) criminal prosecution for executives
D) return of ill-gotten gains
E) All of these are correct.
Q2) The most important factor in encouraging employee observance to an ethics program is that employees perceive that it is
A) compliance-based.
B) values-based.
C) achievement-oriented.
D) stakeholder-based.
E) externally oriented.
Q3) Which of these is the preferred approach for dealing with conflicts of interests?
A) management
B) disclosure
C) remediation
D) avoidance
E) awareness
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Page 7
Chapter 6: Professional Accounting in the Public Interest
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Sample Questions
Q1) Using partners who do not report to audit partners for the provision of non-assurance services to an assurance client would be an example of
A) safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation.
B) safeguards reducing the risk of conflict of interest within a client.
C) safeguards reducing the risk of conflict of interest within a professional accounting firm.
D) safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation, and safeguards reducing the risk of conflict of interest within a professional accounting firm.
E) All of these are correct.
Q2) Which organization can issue auditing standards in the United States?
A) AICPA
B) FASB
C) SEC
D) PCAOB
E) All of these are correct.
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Page 8
Chapter 7: Managing Ethics Risks & Opportunities
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Sample Questions
Q1) An employee in charge of counting and depositing cash holdings at end of the day urgently needs some extra cash to pay her son's medical bills. Using the fraud triangle, this situation likely constitutes A) motive/need.
B) rationalization.
C) opportunity.
D) motive/need and rationalization.
E) motive/need and opportunity.
Q2) The new Enterprise Risk Management (ERM) focusses on how risks and opportunities might impact on the achievement of strategic goals and on the creation, preservation, realization or erosion of value. ERM involves the assessment of an organization's A) culture.
B) capabilities.
C) practices.
D) strategies.
E) All of these are correct.
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9
Chapter 8: Subprime Lending Fiasco Ethics Issues
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Sample Questions
Q1) Mark-to-market accounting is usually related to all of the following items, EXCEPT
A) derivatives and financial instruments.
B) firm's long term cash flows.
C) firm's short term taxes payable.
D) firm's short term cash flows.
E) immediate recognition of unrealized gains and losses.
Q2) Which of the following is NOT an example of aggressive lending practices contributing to the subprime crisis?
A) Mortgagors were not required to make any down payment at the inception of the loan.
B) Loans were given to people with poor credit histories.
C) Loans were given to people with no income.
D) A borrower could get a second mortgage and use it as down-payment.
E) None of these are correct.
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