Deck 5: Corporate Ethical Governance & Accountability

Question 1

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

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

Answer 1

B

Question 2

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

Answer 2

E

Question 3

This is the preferred approach to deal with conflicts of interests

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

Answer 3

D

Question 4

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 5

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)

Question 6

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

A)Preventing, detecting and punishing 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 7

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

A)Shareholders' and stakeholders' goals
B)Manager's and stakeholders' goals
C)Shareholders' and managers' goals
D)Principal's and shareholders' goals
E)Agent's and stakeholders' goals

Question 8

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 9

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

A)Compliance-based
B)Value-based
C)Achievement oriented
D)Stakeholder-based
E)Externally oriented

Question 10

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

A)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 11

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

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

Question 12

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 13

Which of the following is NOT an example of emerging public accountability standards or initiatives?

A)SOX-404
B)GRI
C)AA-1000
D)FTSE4Good
E)All of the above are examples

Question 14

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 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 expectations of stakeholders may not be met

Question 15

Which of the following is not true?

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

Question 16

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

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

Question 17

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

A)P has a special interest that interferes with proper judgement
B)D may have to exercise judgement in P's behalf
C)D has a special interest that interferes with proper judgement
D)(a)and (b)
E)(b)and (c)

Question 18

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

A)Preventing, detecting and punishing 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 19

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 20

The company's internal auditors and the Ethics Officer should report:

A)Day-to-day to the CEO
B)Day-to-day 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)