Deck 5: Ethics and Compliance in the Corporation

Question 1

Which of the following terms is defined as adherence to rules, laws, standards, and policies?

A) compliance
B) ethics
C) regulation
D) goodwill

Answer 1

compliance

Question 2

Which of the following best represents the difference between ethics and compliance?

A) Those who commit ethical violations are punished. Those who fail to comply with conduct standards are not.
B) Ethics involves proactively following a set of moral principles. Compliance involves reacting to set boundaries.
C) Ethics is most effective when people voluntarily adhere to norms of behavior. Compliance is most effective following punishment.
D) Ethical behavior is more important to society than to business. Compliance is more important to business than society.

Answer 2

Ethics involves proactively following a set of moral principles. Compliance involves reacting to set boundaries.

Question 3

Which of the following is the best example of compliance?

A) Aaron remains with his company through a public scandal because he believes loyalty is important.
B) Though Benito dislikes his coworker, he treats him with respect.
C) Carley politely refuses vendor gifts since they violate company policy.
D) Dao values integrity, so she tells her supervisor about her recent and costly mistake.

Answer 3

Carley politely refuses vendor gifts since they violate company policy.

Question 4

You are watching a movie about the trial of two marines accused of killing another marine. As the story progresses, you learn that the two marines were ordered by their colonel to haze the now-deceased marine because he was not performing up to the regiment's standards. Which of the following best describes the behavior of the two marines?

A) The two marines complied with the colonel's orders and acted ethically.
B) The two marines failed to comply with the colonel's orders and acted unethically.
C) The two marines failed to comply with the colonel's orders but acted ethically.
D) The two marines complied with the colonel's orders but acted unethically.

Question 5

Which of the following was the first large-scale regulation of business and forms the foundation of today's regulation of mergers and acquisitions?

A) Federal Trade Commission
B) Consumer Financial Protection Bureau
C) Securities Acts of 1933 and 1934
D) Sherman Antitrust Act

Question 6

Which of the following best describes the similarity between the Sherman Antitrust Act and the Securities Acts?

A) their focus on environmental concerns
B) their usefulness in breaking up monopolies
C) the use of transparency in company reports as behavioral control
D) the impact of social activism on federal law

Question 7

All of the following were enacted in response to concerns of the 1960s and 1970s EXCEPT

A) Foreign Corrupt Practices Act
B) Clean Air Act
C) Clean Water Act
D) Sarbanes-Oxley Act

Question 8

While listening to her local news, Frances hears a story about a government recall of a spray-on sunscreen found to contain low levels of benzene. Which agency sought to protect public health by issuing that recall?

A) Federal Trade Commission
B) Food and Drug Administration
C) Environmental Protection Agency
D) Bureau of Alcohol, Tobacco, Firearms and Explosives

Question 9

Graham grew up on a tobacco farm. In college, he rolled his own cigarettes and sold them to fellow students. Now he is attempting to have packages of his cigarettes sold in local bars and convenience stores. Which government agency would attempt to prohibit Graham from illegally trafficking his cigarettes?

A) Bureau of Alcohol, Tobacco, Firearms and Explosives
B) Federal Trade Commission
C) Environmental Protection Agency
D) Drug Enforcement Administration

Question 10

While planning a family trip, Hector reads an online article warning of potential safety hazards in vacation rental homes. Which government agency most likely wrote or contributed information to this article?

A) Food and Drug Administration
B) Consumer Product Safety Commission
C) Environmental Protection Agency
D) Consumer Financial Protection Bureau

Question 11

Isobel is interviewing for a job as an accounting supervisor. She knows the hiring manager will not discriminate against her because she uses a wheelchair. Which government agency protects Isobel from this type of discrimination?

A) Securities and Exchange Commission
B) Federal Trade Commission
C) Equal Employment Opportunity Commission
D) Federal Energy Regulatory Commission

Question 12

Which government agency provides Jamal with the confidence to invest in the U.S. stock market?

A) Federal Trade Commission
B) Environmental Protection Agency
C) Consumer Financial Protection Bureau
D) Securities and Exchange Commission

Question 13

A commercial airplane crashes into an open field. Which government agency would investigate?

A) Bureau of Alcohol, Tobacco, Firearms and Explosives
B) Consumer Product Safety Commission
C) Environmental Protection Agency
D) Federal Aviation Administration

Question 14

After a massive chemical spill by a local plant, Katerina is concerned with the safety of her drinking water. Which government agency would ensure her protection?

A) Consumer Product Safety Commission
B) Federal Trade Commission
C) Environmental Protection Agency
D) Federal Energy Regulatory Commission

Question 15

Based on your reading about Enron, which of the following conclusions can you draw?

A) Arthur Andersen complied with accounting standards but behaved unethically.
B) Fraud is more easily hidden by publicly traded companies than private ones.
C) The collapse of a large and successful company, like Enron, requires that unethical behavior permeate all levels of the organization.
D) Unethical behavior by company leadership can affect thousands of other unsuspecting people.

Question 16

Which of the following led to the passage of the Sarbanes-Oxley Act (SOX)?

A) the Great Recession of 2007-2009
B) the collapse of Enron and Arthur Andersen due to fraudulent behavior
C) social activism and concern for the natural environment
D) the abundance of large monopolies

Question 17

Which statement most accurately describes the Sarbanes-Oxley Act (SOX)?

A) Special purpose entity accounting is required of all businesses.
B) Company CEOs are held to higher ethical standards than other employees.
C) Company CEOs may be legally accountable for accounting errors.
D) Accounting firms are legally required to act as both auditors and consultants.

Question 18

The compliance/regulatory response to the Great Recession of 2007-2009 was the Dodd-Frank Act, which established all of the following EXCEPT

A) Commodity Futures Trading Commission
B) Consumer Financial Protection Bureau
C) Financial Stability Oversight Council
D) Volcker Rule

Question 19

Erica is a first-time home buyer. Though she is anxious about taking on the responsibility of a mortgage, she has a thorough understanding of her subsequent obligations because of the

A) Commodity Futures Trading Commission
B) Consumer Financial Protection Bureau
C) Financial Stability Oversight Council
D) Volcker Rule

Question 20

Briefly describe the evolution of corporate compliance.

Question 21

The Federal Sentencing Guidelines for Organizations help define punishment for organizations convicted of a crime. They include all of the following EXCEPT

A) jail time for CEOs
B) probation
C) community service
D) hefty fines

Question 22

Which of the following considerations was added in the 2004 amendment to the Federal Sentencing Guidelines for Organizations?

A) compliance
B) corporate culture
C) corporate culpability for unlawful employee conduct
D) consistent enforcement of disciplinary measures

Question 23

If a company is convicted of a federal crime and can prove that it had effective compliance and ethics programs in place, then

A) the conviction may be overturned
B) it may avoid all punishment
C) it may receive a reduced sentence
D) only the guilty employees will be punished

Question 24

Which of the following was added in the 2004 amendment to the Federal Sentencing Guidelines for Organizations to clarify and detail compliance efforts?

A) training and communication guidelines
B) monitoring strategies
C) protection and detection procedures
D) a whistleblower system

Question 25

Which government agency provided more guidance about corporate compliance efforts relative to the Federal Sentencing Guidelines for Organizations in 2017 and 2020?

A) Department of Justice
B) Department of Homeland Security
C) Federal Trade Commission
D) Securities and Exchange Commission

Question 26

Meghan was convicted of accepting bribes in exchange for contract awards. Under what conditions is her employer culpable for her actions?

A) only if someone knew about Meghan's actions before her conviction
B) only if someone approved Meghan's actions before her conviction
C) Meghan's employer is culpable, even if it did not know about or approve her actions.
D) Meghan's employer is not culpable under any conditions.

Question 27

ABC Company executives and managers act as role models for the rest of the company. Recently, to promote fairness, a human resources director stripped the names from resumes before the hiring manager saw them and a procurement specialist refused a bribe. These behaviors, and similar others, are publicized at company meetings. ABC is attempting to

A) alert employees to criminal behavior
B) create an organizational culture of ethics and compliance
C) earn "credits" with the Department of Justice
D) encourage whistleblowing

Question 28

While conducting a search for a new chief information officer, you learn that one candidate was terminated from his last job for sexual harassment. You eliminate his resume from consideration. This scenario describes which of the 1991 Federal Sentencing Guidelines for Organizations' "seven hallmarks of an effective compliance program"?

A) response and prevention
B) monitoring
C) high-level oversight
D) due care

Question 29

Naji procures services for the local government. To ensure that he is soliciting at least three competitive vendor bids, Naji is required to present each bid at a department meeting. This scenario describes which of the 1991 Federal Sentencing Guidelines for Organizations' "seven hallmarks of an effective compliance program"?

A) prevention and detection procedures
B) due care
C) consistent enforcement
D) training and communication

Question 30

Recent college graduate Olivia was hired to oversee compliance at a large insurance company. She quickly discovered that her colleagues dismissed her concerns about noncompliant actions due to her entry-level position. Which of the 1991 Federal Sentencing Guidelines for Organizations' "seven hallmarks of an effective compliance program" is missing in this scenario?

A) response and prevention
B) consistent enforcement
C) monitoring
D) high-level oversight

Question 31

XYZ Company discovers that several employees have used their corporate expense accounts to pay for expensive personal items. XYZ then creates a system of sign-offs for all expense accounts to stop further misconduct. This scenario describes which of the 1991 Federal Sentencing Guidelines for Organizations' "seven hallmarks of an effective compliance program"?

A) prevention and detection
B) response and prevention
C) high-level oversight
D) due care

Question 32

You and your college roommate Parker have formed a small accounting firm. Parker says you do not need to worry about the Federal Sentencing Guidelines for Organizations or compliance programs. What is your best response?

A) You will not have to worry about the Federal Sentencing Guidelines for Organizations' guideposts for compliance efforts until you have more than 50 employees.
B) You will not have to worry about the Federal Sentencing Guidelines for Organizations' guideposts for compliance efforts until you have more than 500 employees.
C) The Federal Sentencing Guidelines for Organizations regarding compliance efforts are important for businesses of all sizes.
D) Following the Federal Sentencing Guidelines for Organizations is mandated by the Department of Justice.

Question 33

Human resources manager Quinn is reviewing candidate profiles for a new chief financial officer and specifically seeks out information about prior legal violations. In this scenario, Quinn is abiding by which of the ten additions to the 2004 amendment to the Federal Sentencing Guidelines for Organizations?

A) history of violations
B) conduct and internal control
C) leadership accountability
D) risk assessment

Question 34

During orientation, human resources manager Ricardo has a group of new hires watch videos about the company's ethics program. Each also receives a desk copy of regulations and standards. In this scenario, Ricardo is abiding by which of the 10 additions to the 2004 amendment to the Federal Sentencing Guidelines for Organizations?

A) leadership accountability
B) conduct training
C) encourage employees
D) conduct and internal control

Question 35

Sadie is in charge of implementing a compliance and ethics program at her consumer products company. As a high-level manager, she has the authority to mandate participation, adherence to standards, and enforcement of penalties. This scenario describes which of the 10 additions to the 2004 amendment to the Federal Sentencing Guidelines for Organizations?

A) risk assessment
B) whistleblower system
C) resources and authority
D) tone at the top

Question 36

At his new job, Tristan is able to access a database detailing the standards of conduct and internal control systems that promote compliance with the law. This scenario describes which of the 10 additions to the 2004 amendment to the Federal Sentencing Guidelines for Organizations?

A) tone at the top
B) resources and authority
C) evaluation of programs
D) conduct and internal control

Question 37

Urban knew that his company discouraged accepting expensive vendor gifts, but he was not sure if he could allow a vendor representative to buy his lunch while they discussed potential business. Urban followed company procedure and sent an email seeking clarification on his dilemma. This scenario describes which of the 10 additions to the 2004 amendment to the Federal Sentencing Guidelines for Organizations?

A) encourage employees to report
B) whistleblower system
C) evaluation of programs
D) conduct and internal control

Question 38

When Violet discovered that some employees were falsifying public reports to inflate company stock prices, she used the company tip line to report the violation anonymously. This scenario describes which of the 10 additions to the 2004 amendment to the Federal Sentencing Guidelines for Organizations?

A) encourage employees to report
B) whistleblower system
C) evaluation of programs
D) conduct and internal control

Question 39

You and your friend Liam are viewing a news report about a national bank executive who was arrested for using company assets to procure real estate assets for himself and an overseas government official-a violation of the Foreign Corrupt Practices Act. The bank is arguing that it followed the Federal Sentencing Guidelines for Organizations by employing an effective compliance and ethics program, so it should receive a light punishment. A bank representative discusses the frequent emails it sends and the once-a-year teleconferences required of all employees. The rep notes that the offending employee attended all teleconferences without fail. Liam says he thinks the bank has made a good case for itself with the Department of Justice. What is your best response?

A) You note that the bank's compliance program may not be all that effective considering employees can merely delete emails or choose to perform other tasks while on a teleconference. You think the bank should receive a harsher punishment.
B) You agree with Liam. The bank has a strong compliance program in place, which the offending employee completed. As a result, the bank should receive a reduced sentence.
C) Even one violation proves a company's compliance program ineffective; therefore, the company should receive a harsh punishment.
D) Since no other bank employees have been arrested, the compliance program is likely effective; therefore, the bank should receive no punishment.

Question 40

You and five former work colleagues have opened your own financial services company. Why is it important to understand and implement Federal Sentencing Guidelines for Organizations?

Question 41

According to a 2019 survey by the Ethics & Compliance Initiative, 45% of employees report having witnessed an ethical violation or compliance issue. Of those, how many chose not to report the violations?

A) 34%
B) 51%
C) 75%
D) 96%

Question 42

According to a 2019 survey by the Ethics & Compliance Initiative, employees most commonly reported ethical violations

A) through a helpline or hotline
B) to their direct supervisors
C) to human resources
D) to the legal department

Question 43

All of the following are benefits of using online training for a compliance program versus in-person training EXCEPT

A) eco-friendliness
B) flexibility
C) hands-on learning
D) timeliness

Question 44

Which of the following would be a suitable disciplinary measure for an employee who violated compliance policies?

A) unfavorable work hours
B) retaliation
C) retraining
D) suspension

Question 45

Investing in compliance programs tends to result in

A) a very high return on investment
B) an increase in market share
C) damage to the firm's reputation
D) business losses

Question 46

All of the following are processes undertaken by compliance departments EXCEPT

A) creating a system for employees to report potential violations
B) conducting training sessions and disseminating materials
C) hiring employees without a propensity for unethical behavior
D) enforcing compliance through incentives and disciplinary measures

Question 47

Wyatt works at a warehouse for a large online retailer and notices another employee stealing small, expensive electronics. Wyatt's employer has a formal structure for reporting such ethical violations. According to research, Wyatt is most likely to

A) report the incident via an email
B) report the incident using a telephone hotline
C) begin stealing himself
D) ignore the violation

Question 48

A global consumer products manufacturer uses an external call center to handle international calls for its compliance department. Employee Xavier spends much of his day collecting calls, emails, and online forum information. What will he do with the information next?

A) investigate each issue
B) create an action plan for management
C) develop a set of appropriate punishments
D) sort the tips and concerns into categories

Question 49

Yael works in her company's compliance department. She recently categorized all the recent complaints and tips. If she follows the standard process, what will she likely do next?

A) investigate each issue
B) create an action plan for management
C) develop a set of appropriate punishments
D) focus on the collection of more tips

Question 50

Zeke learns that his manager is using proprietary company information for personal gain. According to research by the Ethics and Compliance Initiative, why might Zeke decide to keep the information to himself?

A) to use it for blackmail later
B) fear of retaliation
C) fear of guilt by association
D) to use the scheme for his own personal gain

Question 51

Anele referred to his political views on social media. The next day, his supervisor mocked and harassed him for them. Under what conditions might Anele be more inclined to report his supervisor to someone at the company for noncompliance?

A) if there were a company hotline or helpline
B) if the company culture valued employees' freedom of speech
C) if the company had a policy preventing retaliation
D) if other employees were harassed similarly

Question 52

Bella works in the compliance department and has assumed responsibility for the company's sexual harassment policy. After writing and publishing the policy, the first thing Bella must do is

A) enforce the policy
B) monitor how well company employees are complying
C) motivate employees and managers to attend training sessions
D) create training materials to further explain those policies

Question 53

Which of the following employees would benefit most from live, classroom-style training on compliance policies?

A) Charlie, who works as an ER nurse
B) Divia, who works in IT
C) Ellie, who works in management overseas
D) Fiona, who works on a production line

Question 54

Gabe manages a group of advertising creative professionals and actively has discouraged them from "wasting valuable work time" attending the company's compliance training sessions. Gabe himself has skipped all sessions. What is the best way to motivate Gabe to attend compliance training with his employees?

A) provide refreshments
B) raffle off prizes
C) withhold performance raises
D) use peer pressure

Question 55

Growing ABC Company has recently formed a compliance department. When discussing the department's mission and goals, Heather says the best time to train employees about compliance issues is

A) right after an ethical "scandal"
B) during the employee onboarding process
C) during work downtime
D) at their yearly performance review

Question 56

Which of the following best describes the difference between compliance training and monitoring?

A) the need for written policies
B) the use of electronic equipment
C) the benefit of compliance professionals
D) the frequency of occurrence

Question 57

Which of the following compliance employees is engaged in monitoring employees?

A) Isadore checks the company hotline daily.
B) Jazmine eats lunch with the same group of colleagues each day.
C) Kendall discusses company policies and procedures during employee orientation.
D) Lance attends all executive board meetings.

Question 58

After attending an out-of-town conference, Margot submits her expense report for reimbursement. Upon review, her manager Nick finds several personal expenses that should not be included, which is grounds for termination according to compliance standards. Nick discusses the situation with Margot, who then revises and resubmits the report. What is the most likely reason for Nick's lenient response?

A) Company culture does not support disciplinary actions for noncompliance with the code of conduct.
B) Margot included those expenses by mistake.
C) Nick thinks termination is too harsh a punishment.
D) Margot and Nick have not been trained on compliance standards.

Question 59

You and your fellow managers at XYZ Manufacturing are frustrated because employees rarely report workplace injuries and accidents. During a meeting to decide how to encourage compliance, one manager suggests offering monetary incentives for proper reporting. You disagree. What is your best and most convincing response?

A) Your organizational culture frowns on incentives.
B) Incentives are a long-term fix and you need change in the short term.
C) Incentives mask the reason for doing the right thing.
D) Incentives will reduce the amount of revenue the compliance department produces.

Question 60

You are attending a meeting about how much money to invest in your company's compliance department. What is your best response?

Question 61

The key compliance policy of an organization is referred to as a/an

A) code of conduct
B) organizational chart
C) mission statement
D) values map

Question 62

According to recent data, about how many organizations use a code of conduct accessible to all employees?

A) 26%
B) 49%
C) 62%
D) 94%

Question 63

All of the following are names used in place of "code of conduct" EXCEPT

A) code of business ethics
B) employee principles
C) code of ethical conduct
D) standards of business conduct

Question 64

In addition to referring to expectations for employee behavior, a code of conduct also references

A) employee concerns
B) diversity issues
C) company values
D) government agencies

Question 65

Which of the following required a code of conduct for all publicly traded companies?

A) Sarbanes-Oxley Act
B) Consumer Financial Protection Bureau
C) Sherman Antitrust Act
D) Federal Trade Commission

Question 66

What is the best similarity between a code of conduct and a mission statement?

A) the embodiment of a company's culture
B) the inclusion of a company's core values
C) the inclusion of tangible behaviors and actions
D) the focus on aspirations

Question 67

Which of the following best describes the difference between a code of conduct and a mission statement?

A) the impact on corporate culture
B) the formality with which it is written
C) the subject matter on which it focuses
D) the intended audience

Question 68

Which of the following statements would be more suited to a mission statement than a code of conduct?

A) Please refrain from interfering with the safe operation of vehicles.
B) Indecent exposure is forbidden.
C) Vulgar or threatening language will not be tolerated.
D) Accelerate the transition to sustainable energy.

Question 69

Which of the following statements would be more suited to a code of conduct than a mission statement?

A) Accept only consumable vendor gifts.
B) Offer customers the lowest possible prices.
C) Build a cost-effective payment system.
D) Spread ideas.

Question 70

A code of conduct

A) is most appropriate for executive-level employees
B) is most appropriate for entry-level employees
C) summarizes company policies and expected employee behaviors
D) exhaustively covers all aspects of each company policy and expected employee behavior

Question 71

Because a code of conduct references a multitude of stand-alone policies, it is often compared to a/an

A) blanket
B) inverted triangle
C) caboose
D) umbrella

Question 72

Oscar is reading his company's code of conduct online and would like more information on the safeguarding of information. How is he most likely to find it?

A) via a hotline number included at the top
B) via an intranet link included in the text material
C) by meeting with a compliance department employee
D) by reading through his old employee onboarding materials

Question 73

Phoebe is reading a printed copy of her company's code of conduct and wants more information about countering corruption. How is she most likely to find it?

A) by reading the entire policy to which the printed material refers
B) by meeting with a compliance department employee
C) via a hotline number included at the top
D) via an intranet link included in the text material

Question 74

XYZ is a privately held company with an exhaustive policy manual. Why would it want to create a code of conduct as well?

A) The Sarbanes-Oxley act requires it.
B) It reminds employees of the punishments attached to ethical violations.
C) It links a company's mission and principles with conduct standards in an accessible and useful format.
D) Templates available on the Internet make creation quick and easy.

Question 75

Why have online codes of conduct become more visually appealing in recent years?

A) Templates for creation now are free and easy to use.
B) The more engaging the code, the more likely all employees will read it and comply.
C) The code is used to convey further the organizational culture.
D) Codes are increasingly being written by younger, tech-savvy employees.

Question 76

Which of the following employees would be most likely to write the introduction to a new, online code of conduct?

A) Pranay, a newly employed HR representative
B) Queenie, a compliance manager
C) Rachael, the CEO's executive assistant
D) Scott, the chief operating officer

Question 77

Your company has just updated its code of conduct and placed it on the company intranet for all to view. How do you expect the document to be written?

A) using legal terms matching the regulatory environment
B) in a manner understandable by all employees
C) using business terms appropriate for the sector
D) at a twelfth-grade reading level

Question 78

Which of the following accurately describes how a code of conduct can benefit an employee of the organization that issued it?

A) Employees can be more successful because they know how they are expected to act.
B) Employees can use the information to earn extra money and promotional incentives.
C) Employees can use the information to better choose among potential employers.
D) Employees can better their employment status by reporting ethical violations.

Question 79

Which of the following statements best describes the relationships among compliance departments, compliance program processes, and codes of conduct?

A) A code of conduct is a tool used by the compliance department to communicate expected employee behaviors. The department then uses compliance program processes to uphold the code.
B) A code of conduct is used to determine the need for an entire compliance department. Once established, the department uses compliance program processes to uphold the code.
C) Compliance program processes drive the creation of a code of conduct, which is governed by the compliance department.
D) A well-written code of conduct and proper compliance program processes eliminate the need for a compliance department.

Question 80

Your start-up company is growing and you have recently hired 25 new employees. In a meeting with your business partners, you suggest creating a code of conduct. How would you describe it?