Deck 7: Corruption and Ethics in Global Business

Question 1

WorldCom is a perfect example of effective social and ethical responsibility in the financial sector.

Answer 1

False

Question 2

If people did not ethically behave, trust is not possible.

Answer 2

True

Question 3

SOX requires that the CEO and the CFO of a publicly traded corporation must certify in each periodic report containing financial statements that the report fully complies with the Securities Exchange Act of 1934 and that the information fairly represents the company's financial condition and results of operations.

Answer 3

True

Question 4

Corporate social responsibility refers only to the company's obligations to its stockholders and investors.

Question 5

Internal control procedures fit into two categories:
1)preventing accidental errors and intentional misrepresentations and 2)identifying errors and irregularities after they occur so that corrective action may be taken.

Question 6

In the business world, the purpose of ethics is to direct business men and women to make as much money as they can any way possible.

Question 7

Of the following statements, which is NOT true about ethics and integrity?

A) A person of integrity has knowledge about what morally constitutes the right things to do.
B) A person of integrity has the courage to do what is right.
C) Ethical situations are always black and white.
D) There are four basic steps in ethical decision making.
E) An ethical dilemma occurs when one must make a choice among alternative actions and the right choice is not absolutely clear.

Question 8

One way to resolve an ethical question is to apply the formal policies of your company or code of conduct to help determine the ethical course of action.

Question 9

There are _____ basic steps in ethical decision-making.

A) two
B) three
C) four
D) five
E) six

Question 10

Vivendi, a French-based multination corporation, gained international scorn when it was discovered they cooked their books to make their performance appear better than it actually was for the purpose of making a number of acquisitions.

Question 11

Production quality control and internal auditing are example of feedback controls.

Question 12

The five fundamentals of ethics education proposed by AACSB are: personal integrity, responsibility of business in society, ethical decision making, ethical leadership, and corporate governance.

Question 13

The branch of philosophy that addresses the values pertaining to human behavior, with regard to the "rightness" and "wrongness" of actions and to the "goodness" and "badness" of the intent and results of such actions is called _____.

A) ethics
B) integrity
C) values
D) morals
E) principles

Question 14

In 2005, Bernie Ebbers was recognized by the Better Business Bureau for his company being a leader in social responsibility.

Question 15

The four basic steps in ethical decision making are: define all the facts and circumstances, identify the people affected, determine the alternative decisions and consequences, and make the decision and carry it out.

Question 16

The Sarbanes-Oxley Act of 2002 set "green" standards for companies.

Question 17

Do what produces the greatest good. This statement refers to the _____ principle.

A) essence
B) governance
C) imperative
D) utilitarian
E) generalization

Question 18

The global slave trade that exists today is referred to as human trafficking.

Question 19

A person of integrity has two essential characteristics:
1)knowledge about what morally constitutes the right thing to do, and 2)_____.

A) follows the steps of ethical decision making
B) the ability to solve an ethical dilemma
C) the courage to do what is right
D) the ability to evaluate goals and objectives
E) the ability to think cognitively

Question 20

The Foreign Corrupt Practices act consist of two parts: an anti-bribery provision and a requirement to comply with green standards.

Question 21

Which of the following is NOT a value described in the BBB Code of Business Practices?

A) Build trust
B) Make the decision
C) Define all the facts and circumstances
D) Identify the people affected by the situation
E) Determine that a decision needs to be made

Question 22

Do what is right, but filter the action by consideration of its consequences. Make a decision by considering the consequences if everyone made the same choice under similar circumstances. These statements refer to the _____ argument.

A) essence
B) governance
C) imperative
D) utilitarian
E) generalization

Question 23

A company's obligations to society, including the welfare of people and places affected by company activities is called _____.

A) Ponzi scheme
B) corporate social responsibility
C) ethics
D) integrity
E) green business

Question 24

Examples of _____ controls include production quality control and internal auditing.

A) feedforward
B) feedback
C) vertical
D) horizontal
E) identical

Question 25

The government can force an individual to sell his or her land so that a road can be built for the benefit of the public as a whole. This is an example of the _____ principle.

A) essence
B) governance
C) imperative
D) utilitarian
E) generalization

Question 26

Internal control procedures fit into _____ categories.

A) two
B) three
C) four
D) five
E) six

Question 27

The third step of ethical decision making is to _____.

A) identify the alternative decisions and consequences
B) make the decision
C) define all the facts and circumstances
D) identify the people affected by the situation
E) determine that a decision needs to be made

Question 28

Of the following, which is NOT a mandate that companies with corporate social responsibility strive to do?

A) Provide a quality product or service to its customers
B) Treat its employees with dignity and respect
C) Do whatever it takes to be profitable
D) Meet its legal obligations
E) Fairly deal with suppliers

Question 29

The fourth step of ethical decision making is to _____.

A) identify the alternative decisions and consequences
B) make the decision
C) define all the facts and circumstances
D) identify the people affected by the situation
E) determine that a decision needs to be made

Question 30

_____ refers to a system of rules and procedures designed to ensure the accuracy and reliability of financial and accounting information.

A) Internal controls
B) External controls
C) Environmental controls
D) Global controls
E) Legal controls

Question 31

Who said, "To educate a person in mind and not in morals is to educate a menace to society"?

A) George Bush
B) Henry Ford
C) Theodore Roosevelt
D) George Washington
E) Erin Brockovich

Question 32

Asking oneself "What if everyone did it?" is an example of the principle of _____.

A) morality
B) consistency
C) fairness
D) justice
E) respect

Question 33

Of the following statements about Vivendi, which is NOT true?

A) It is a Swiss-based corporation.
B) Between October 2000 and April 2002, the company cooked its books to make its financial performance appear better than it was.
C) Vivendi agreed to pay a fine of $50 million.
D) Company CEO Jean Merrier was required to pay a fine of $1 million.
E) Company CEO Jean Merrier was required to forfeit his $25 million severance package.

Question 34

_____ received the CSR Award for the Environment from the Retail Council of Canada in 2010.

A) Wal-Mart
B) Coca-Cola
C) Procter & Gamble
D) Starbucks
E) Exxon

Question 35

_____ is considered by many to be the most infamous financial scandal in United States history.

A) Bank of America
B) Enron
C) Vivendi
D) Parmalat
E) Teapot Dome

Question 36

The _____ is a report published each year by Transparency International, providing metrics to the potential corruption risk for 180 countries.

A) Corruption Perceptions Index
B) Social Responsibility Report
C) Ponzi Scheme
D) Integrity Perceptions Report
E) Ethical Violations Index

Question 37

Internal control procedures fit into two categories:
1)preventing accidental errors and intentional misrepresentations from occurring, and 2)_____.

A) reprimanding employees responsible for errors
B) covering up errors after the occur
C) punishing those responsible for errors
D) identifying errors and irregularities after the occur
E) overlooking errors after they occur

Question 38

Of the following statements about WorldCom, which is NOT true?

A) It began in 1983 as Long Distance Discount Services, Inc.
B) From 1999 to 2002, the company had manipulated earnings by using fraudulent accounting methods.
C) Five techniques were used to cook the books.
D) WorldCom filed for Chapter 11 bankruptcy in 2002.
E) CEO Bernie Ebbers was sentenced to 25 years in prison.

Question 39

Of the following, which is NOT true of the Enron financial scandal?

A) It was a key event leading the U.S. Congress to pass the Sarbanes-Oxley Act of 2002.
B) Unfortunately, it was always regarded as an unethical company.
C) In 2000, corporate revenues exceeded $100 billion.
D) The company's former president, Jeffrey Skilling, led Enron to abuse an accounting practice known as mark to market accounting.
E) The truth about Enron was revealed in 2001.

Question 40

According to the text, what question ought to be asked when acting upon high ethical standards in business?

A) If everyone else is cheating, then how can an ethical person possibly succeed?
B) How do you measure success?
C) What would others in my situation do?
D) What would my family think?
E) Will I regret this decision?

Question 41

_________ are a system of rules and procedures within a business designed to ensure the accuracy and reliability of financial and accounting information

Question 42

________ is a report published each year by Transparency International, providing metrics to the potential corruption risk for 180 countries.

Question 43

Which of the following is not a fundamentals of ethics education suggested by AACSB?

A) Personal integrity
B) Emotional intelligence
C) Ethical leadership
D) Corporate governance
E) Responsibility of business in society

Question 44

A type of fraud, in which money received from later investors is used to provide returns to earlier investors, thus giving an appearance of a profitable investment is called a ______ scheme.

Question 45

The _______ is a U.S. federal law that consists of two parts: an anti-bribery provision and a requirement to maintain an adequate internal control system over financial books and records

Question 46

Scenario - Bradley Corporation
The Bradley Corporation manufactures packaged food items that are sold around the globe. Baby food is the prominent product line currently produced by the corporation. Many of the customers for these products are located in third world countries where infant nutrition is a serious problem.
Bradley has recently decided to change its internal management structure. New managers for the corporation are now in place; however these new leaders do not appear to have the same value system as the former leaders. The former leaders embraced the idea of product safety and exhibited integrity in the production of the corporation's product lines. While the new managers claim these are important to them also, it seems the bottom line profit has precedent with them.
These changes have created concern in the company. There is strong disapproval for the way the company is conducting its business at the present time. The Board of Directors for Bradley is facing the serious question of whether profit is the only thing that matters now to the corporation.
There is a distinct difference in the value systems between the original and new managers of the Bradley Corporation. All of the following except which one represents a key issue in ethics education, which if reinforced to the new managers, could strengthen their current value systems?

A) Reinforcement of corporate governance
B) Reinforcement of ethical decision-making
C) Identification of ethical leadership
D) Recognition for the necessity of vast profits
E) Fortifying information regarding the responsibility of business in society

Question 47

Accounting practices that update the value of an asset to its current market levels are referred to as ______.

Question 48

Employees of ABC International generally describe their CEO, Mr. James Duncan, as a man of moral and ethical principles, sound moral character, and honest. Mr. Duncan can be described as an individual with ______.

A) CSR
B) integrity
C) loyalty
D) Ponzi scheme
E) control issues

Question 49

Act according to absolute moral rules represent the _____ argument.

A) universal
B) governance
C) imperative
D) utilitarian
E) sustainable

Question 50

Adherence to moral and ethical principles; soundness of moral character; and honesty demonstrates _________.

Question 51

Imperative principle suggests which of the following?

A) Do what produces the greatest good
B) Do what is right
C) Make the most money
D) Develop an eminent domain
E) Match rewards with performance

Question 52

Which of the following is NOT true regarding the Foreign Corrupt Practices Act?

A) It was passed in 1952.
B) It is a U.S. federal law that contains two parts.
C) It has an anti-bribery provision.
D) It has a requirement to maintain an adequate internal control system over financial records.
E) A few people complain that the FCPA puts American firms at a disadvantage against non-U.S. competitors.

Question 53

Scenario - Bradley Corporation
The Bradley Corporation manufactures packaged food items that are sold around the globe. Baby food is the prominent product line currently produced by the corporation. Many of the customers for these products are located in third world countries where infant nutrition is a serious problem.
Bradley has recently decided to change its internal management structure. New managers for the corporation are now in place; however these new leaders do not appear to have the same value system as the former leaders. The former leaders embraced the idea of product safety and exhibited integrity in the production of the corporation's product lines. While the new managers claim these are important to them also, it seems the bottom line profit has precedent with them.
These changes have created concern in the company. There is strong disapproval for the way the company is conducting its business at the present time. The Board of Directors for Bradley is facing the serious question of whether profit is the only thing that matters now to the corporation.
The Bradley Corporation is faced with a decision that involves selling an outdated product such as baby food to foreign markets to make a large profit versus losing money by destroying outdated products. Which of the following best identifies what the Bradley Corporation is experiencing?

A) A financial predicament
B) An ineffective board
C) The actions of a profitable business
D) A matter for internal decision making
E) An ethical dilemma

Question 54

Scenario - GCD Industries
GCD Industries is a multinational organization that produces heavy equipment. It supplies many foreign nations with the necessary equipment to conduct reconstruction after natural disasters. One of the company's largest sales resulted from the devastation that occurred in Japan after the tsunami hit that nation. GCD is committed to helping nations recover from destruction brought about by natural phenomenon.
GCD prides itself on conducting its business in an honest and ethical manner. It does not wish to deal with countries that engage in corrupt business practices, but realizes that all nations have differing business practices. When the need arises for its products, this company strives to impart integrity into all of its business deals with foreign nations regardless of that nation's accepted practices.
GCD Industries acknowledges it is under the guidelines of the Foreign Corrupt Practices Act whenever it has dealings in the foreign marketplace. Which one of the following is not addressed by this Act?

A) Making the offer to pay money to a foreign official for special privilege afforded to the company
B) Establishing pay scales for employees of the company while working on foreign soil
C) Offering a gift to the head of the foreign political party of the nation where work is being performed
D) Making a promise of payment to government officials for directing business to the company
E) Provision indicating access to assets is allowed only by management's specific authorization

Question 55

______ is the branch of philosophy that addresses the values pertaining to human behavior, with specific regard to the "rightness" and "wrongness" of actions and to the "goodness" and "badness" of the intent and results of such actions.

Question 56

Scenario - GCD Industries
GCD Industries is a multinational organization that produces heavy equipment. It supplies many foreign nations with the necessary equipment to conduct reconstruction after natural disasters. One of the company's largest sales resulted from the devastation that occurred in Japan after the tsunami hit that nation. GCD is committed to helping nations recover from destruction brought about by natural phenomenon.
GCD prides itself on conducting its business in an honest and ethical manner. It does not wish to deal with countries that engage in corrupt business practices, but realizes that all nations have differing business practices. When the need arises for its products, this company strives to impart integrity into all of its business deals with foreign nations regardless of that nation's accepted practices.
GCD Industries attempts to always conduct its business in an ethical manner. It investigates the foreign nations in which it operates so it will be aware of any upcoming business practice differences such as corruption levels the company may face. Which one of the following is the most likely source of the information sought by GCD Industries?

A) CPI
B) WTO
C) CSR
D) WHO
E) FCPA

Question 57

________ refers to a company's obligations to society, including the welfare of people and places affected by company activities

Question 58

Scenario - Bradley Corporation
The Bradley Corporation manufactures packaged food items that are sold around the globe. Baby food is the prominent product line currently produced by the corporation. Many of the customers for these products are located in third world countries where infant nutrition is a serious problem.
Bradley has recently decided to change its internal management structure. New managers for the corporation are now in place; however these new leaders do not appear to have the same value system as the former leaders. The former leaders embraced the idea of product safety and exhibited integrity in the production of the corporation's product lines. While the new managers claim these are important to them also, it seems the bottom line profit has precedent with them.
These changes have created concern in the company. There is strong disapproval for the way the company is conducting its business at the present time. The Board of Directors for Bradley is facing the serious question of whether profit is the only thing that matters now to the corporation.
Corporate social responsibility is defined as a company's obligations to society, including the welfare of people and places affected by the company's activities. Which one of the following would not demonstrate the Bradley Corporation's adherence to its corporate social responsibility?

A) All Bradley employees regardless of their position have a say in new human resource policies before they are implemented.
B) The Bradley Corporation is engaged with green technologies to eliminate potential environmental damage.
C) The Bradley Corporation makes certain a significant return on investment is provided to its stockholders regardless of what must be sacrificed.
D) The corporation maintains a reputation for dealing fairly and honestly with its suppliers.
E) Bradley is known throughout the industry as a company that consistently meets all of its financial and legal obligations.

Question 59

Scenario - GCD Industries
GCD Industries is a multinational organization that produces heavy equipment. It supplies many foreign nations with the necessary equipment to conduct reconstruction after natural disasters. One of the company's largest sales resulted from the devastation that occurred in Japan after the tsunami hit that nation. GCD is committed to helping nations recover from destruction brought about by natural phenomenon.
GCD prides itself on conducting its business in an honest and ethical manner. It does not wish to deal with countries that engage in corrupt business practices, but realizes that all nations have differing business practices. When the need arises for its products, this company strives to impart integrity into all of its business deals with foreign nations regardless of that nation's accepted practices.
GCD Industries employs a set of internal controls within its operations to help ensure ethical behavior and to help prevent financial impropriety. Which one of the following is least likely to be used as an internal control by this company?

A) Corrective actions are taken immediately whenever a department goes over its budget
B) Adequate and accurate documentation and records are maintained
C) Financial and accounting records are periodically audited
D) The company has written policies and procedures for all members to follow
E) All funds due the company and all checks for expenditures are handled by the same person