Deck 5: Corporate Ethical Governance Accountability

Question 1

This is the preferred approach to dealing with conflicts of interest.

A)Management
B)Disclosure
C)Remediation
D)Avoidance
E)Awareness

Answer 1

D

Question 2

Corporations are now increasingly realizing that they are accountable:

A)legally to shareholders.
B)legally to all stakeholders.
C)strategically to additional stakeholders.
D)a and b
E)a and c

Answer 2

E

Question 3

Which of the following is not true?

A)Principles are more useful than rules because principles can be interpreted as required in new circumstances.
B)Rules are more useful than principles because rules can be interpreted as required in new circumstances.
C)A blend of principles and rules is often optimal.
D)All of the above
E)a and c only

Answer 3

B

Question 4

A company's internal auditors and the ethics officer should report:

A)on a day-to-day basis to the CEO.
B)on a day-to-day basis to the Audit Committee of the board of directors.
C)regularly to the Audit Committee of the board of directors without management being present.
D)a and c
E)a and b

Question 5

The 20/60/20 rule states that the total percentage of employees who could commit a fraudulent act is:

A)20.
B)60.
C)80.
D)100.
E)None of the above

Question 6

A fundamental problem examined by agency theory is how it is possible to align:

A)shareholders' and stakeholders' goals.
B)managers' and stakeholders' goals.
C)shareholders' and managers' goals.
D)principals' and shareholders' goals.
E)agents' and stakeholders' goals.

Question 7

The primary focus of an integrity-based ethics program is to:

A)prevent, detect, and punish violations of the law.
B)define organizational values and encourage employee commitment.
C)improve image and relationship with stakeholders.
D)protect management from blame.
E)All of the above

Question 8

A conflict of interest potentially exists when a given decision maker (D)and another person (P)are in the following situation.

A)D has to exercise judgment on P's behalf.
B)P has to exercise judgment on D's behalf.
C)D has a special interest that interferes with proper judgment.
D)a and b
E)a and c

Question 9

Which of the following is not a mechanism for monitoring a code of ethics?

A)Ethics audit or internal audit procedures
B)Reviews by legal department
C)Awards and bonuses
D)Annual sign-off by employees
E)Employee surveys

Question 10

SOX imposed the following new penalties for executives.

A)Fines
B)Suspension
C)Criminal prosecution for executives
D)Return of ill-gotten gains
E)All of the above

Question 11

The primary focus of a compliance-based ethics program is to:

A)prevent, detect, and punish violations of the law.
B)define organizational values and encourage employee commitment.
C)improve image and relationship with stakeholders.
D)protect management from blame.
E)All of the above

Question 12

Building trust within an organization can have a favorable impact on employees' willingness to share information and ideas in a process called:

A)ethical awareness.
B)ethical awakening.
C)ethical renewal.
D)ethical wave.
E)None of the above

Question 13

Which of the following industries are corporate psychopaths likely to be attracted to?

A)Automotive
B)Construction
C)Real estate
D)Transportation
E)Investment banking

Question 14

Which of the following corporate adventures depended on a corporate culture of integrity?

A)Wells Fargo's unethical incentives
B)Siemen's bribery scandal
C)Merck and river blindness
D)Enron's financial manipulations
E)None of the above

Question 15

Which of the following is not an ethics risk management principle?

A)Normal definitions of risk are too narrow for stakeholder accountability.
B)Assign responsibility, develop follow-up processes, and conduct board review.
C)Discovery and remediation are essential.
D)The code of ethics must be reviewed by independent parties.
E)An ethics risk exists when the expectations of stakeholders may not be met.

Question 16

The most important factor in encouraging employee observance of an ethics program is that employees perceive it as:

A)compliance based.
B)values based.
C)achievement oriented.
D)stakeholder based.
E)externally oriented.

Question 17

Experience has revealed that, to be effective, a code must be reinforced by:

A)the tone at the top.
B)ethics officer and internal auditors.
C)a comprehensive ethical culture.
D)principles, rules, and examples.
E)All of the above

Question 18

Which of the following is not a characteristic identified by forensic experts in prospective fraud situations?

A)High intelligence
B)Greed
C)Need for whatever is taken
D)Opportunity to take advantage
E)Low probability of being caught

Question 19

This code deals with ethics principles plus additional examples.

A)Credo
B)Code of ethics
C)Code of conduct
D)Code of practice
E)All of the above

Question 20

A Conference Board survey identified the following rationale for developing codes of ethics.

A)Make employees aware that adherence is critical to bottom-line success
B)Provide a statement of do's and don'ts
C)Discuss what is expected in stakeholder relationships
D)Establish values and mission
E)All of the above