Deck 1: Ethics Expectations

Question 1

Ethical corporate behavior is expected to lead to:

A)higher profitability in the short term.
B)higher profitability in both the short term and the long term.
C)lower profitability in the long term.
D)higher profitability in the long term.
E)lower profitability in both the short term and the long term.

Answer 1

D

Question 2

Companies attempt to manage the risk of something happening that will have a negative or positive impact on the company's objectives, such as:

A)credit risks.
B)litigation risks.
C)reputation risks.
D)ethics risks.
E)All of the above

Answer 2

E

Question 3

This organization is developing an international code of conduct for professional accountants.

A)The International Accounting Standards Board
B)The European Federation of Accountants
C)The Financial Accounting Standards Board
D)The Public Accounting Oversight Board
E)The International Federation of Accountants

Answer 3

E

Question 4

How do we know that the #MeToo movement has been successful?

A)Sexual violence against women has stopped.
B)Police forces are taking women's complaints of bullying seriously.
C)Court cases against high-ranking executives and celebrities are becoming successful.
D)Major companies are investigating and firing executives accused of sexual misbehavior with employees.
E)None of the above

Question 5

Not reporting environmental issues is an example of:

A)a lack of transparency.
B)a lack of integrity.
C)a lack of accuracy.
D)All of the above
E)None of the above

Question 6

The following are determinants of reputation.

A)Trustworthiness and responsibility
B)Credibility, responsibility, and relevance
C)Responsibility and impartiality
D)Relevance and impartiality
E)Relevance, credibility, and responsibility

Question 7

Professional accountants, in their fiduciary role, owe their primary loyalty to:

A)the accounting profession.
B)the client.
C)the general public.
D)government regulations.
E)All of the above

Question 8

The following is a fundamental factor for having an effective ethical corporate culture.

A)Tone at the top (Ethical leadership)
B)Efficient oversight by the company's board of directors
C)Workplace ethics
D)Code of conduct
E)An ethics risk management program

Question 9

This philosophical approach requires that an ethical decision depend upon the duty, rights, and justice involved.

A)Consequentialism
B)Virtue ethics
C)Duty ethics
D)Righteousness
E)Deontology

Question 10

Which of the following is not a trend described in Chapter 1 as having an impact on the ethics of business?

A)Directors' legal liability
B)Management's stated intention to protect reputation
C)Auditors' legal liability
D)Management's assertions to shareholders on the adequacy of internal controls
E)Management's stated intention to manage risk

Question 11

Since the mid-1990s, both management and auditors have become increasingly:

A)profit management oriented.
B)ethics oriented.
C)value management oriented.
D)risk management oriented.
E)marketing oriented.

Question 12

Examining the interests of stakeholders is probably required for:

A)high short-term profits.
B)optimal medium- and longer-term profits.
C)continuing support from stakeholder groups.
D)effective risk management.
E)All of the above

Question 13

Most large corporations do not consider these risks in a broad and comprehensive way.

A)Operational risks
B)Reputational risks
C)Credit risks
D)Market risks
E)Ethics risks

Question 14

The difference between what the public thinks it is getting in audited financial statements and what the public is actually getting is known as:

A)the credibility gap.
B)the expectations gap.
C)the audit gap.
D)the stewardship gap.
E)None of the above

Question 15

Which corporate report discusses subjects that include environmental, health and safety, philanthropic, and other social impacts?

A)A corporate annual report
B)A corporate social responsibility report
C)A corporate quarterly report
D)A corporate stakeholder report
E)A corporate ethics committee report

Question 16

The following would be a key control function of a board of directors.

A)Set guidance and boundaries
B)Appoint the CEO
C)Approve the sale of the company's assets
D)Decide on the company's auditor
E)All of the above

Question 17

A value that is almost universally respected by stakeholder groups is:

A)a super norm.
B)an alfa norm.
C)a value norm.
D)a hypernorm.
E)a general norm.

Question 18

Incomplete disclosure of a company's revenue recognition policy is an example of:

A)a lack of transparency.
B)a lack of integrity.
C)a lack of accuracy.
D)All of the above
E)None of the above

Question 19

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

Question 20

The Modified Moral Standards Approach focuses on the following dimensions of the impact of a proposed action.

A)Whether it provides a net benefit to society, is fair to all stakeholders, is right, and demonstrates the virtues expected
B)Whether it provides a net benefit to society and whether it is legal
C)Whether it provides a net benefit to society, is fair to all stakeholders, and is legal
D)Whether it is fair to most stakeholders and is right
E)Whether it provides a net benefit to society, is fair to most stakeholders, and is right

Question 21

Nonfinancial measures of performance have become increasingly popular because they:

A)are better measures of performance than traditional financial measures.
B)are easier to understand than traditional financial measures.
C)are easier to compute than traditional financial measures.
D)are less susceptible to manipulation than traditional financial measures.
E)All of the above

Question 22

Effective crisis management could represent:

A)an opportunity to avoid costs.
B)an opportunity to change employees' perspectives on risk.
C)an opportunity to enhance a company's reputation.
D)All of the above
E)None of the above

Question 23

NOCLAR rules or standards are important because they:

A)will cause business to observe No Carbon Required practices.
B)will cause executives to be less aggressive.
C)will cause professional accountants to violate employer confidences.
D)will cause professional accountants to report nonsustainable practices of clients.
E)None of the above

Question 24

The August 2019 Business Roundtable Statement on the Purpose of a Corporation is important because:

A)It confirms that profit maximization is the appropriate sole goal of corporations.
B)It confirms that corporations are accountable only to shareholders.
C)It confirms that corporations are to benefit all stakeholders.
D)It changes what most executives have thought.
E)None of the above

Question 25

The International Federation of Accountants (IFAC):

A)is not relevant to professional accountants in most industrialized countries.
B)is not relevant to professional accountants working in industry.
C)was created to develop global accounting, auditing, and ethics standards for professional accountants.
D)has the authority to discipline professional accountants.
E)has an impact on professional accounting practices in less than 20 countries around the world.