Deck 6: The Role of Government

Question 1

The culpability score, according to the Federal Sentencing Guidelines for Organizations, is the calculation of an organization's degree of blame or guilt, and it is a multiplier of the base fine up to 40 times.

Answer 1

False
Explanation: The culpability score of the Federal Sentencing Guidelines for Organizations is the calculation of the degree of blame or guilt used as a multiplier of up to 4 times the base fine.

Question 2

The Securities and Exchange Commission can enforce criminal penalties of up to $2 million per violation of the Foreign Corrupt Practices Act for corporations and other business entities.

Answer 2

False
Explanation: The Department of Justice can enforce criminal penalties of up to $2 million per violation for corporations and other business entities.

Question 3

The Foreign Corrupt Practices Act encompasses all the secondary measures that were in use to prohibit bribery and other illegal forms of payment to foreign officials by focusing on two distinct areas-disclosure and prohibition.

Answer 3

True

Question 4

Under the Foreign Corrupt Practices Act, facilitation payments are payments that are acceptable (legal), provided they expedite or secure the performance of a routine governmental action.

Question 5

Payments to foreign officials made in connection with expediting lawful customs clearances and obtaining the issuance of entry or exit visas are considered bribes under the Foreign Corrupt Practices Act.

Question 6

According to the Federal Sentencing Guidelines for Organizations, businesses cannot be held liable for the criminal acts of their employees and agents.

Question 7

Prior to the passing of the Foreign Corrupt Practices Act, making illegal payments to foreign officials was not punishable through any type of legislation.

Question 8

The Foreign Corrupt Practices Act was introduced to more effectively control bribery and other less obvious forms of payment to foreign officials and politicians by American publicly traded companies as they pursued international growth.

Question 9

Prior to the passing of the Foreign Corrupt Practices Act, the Securities and Exchange Commission was not authorized to penalize company executives for failing to disclose payments under its securities rules.

Question 10

Under the Foreign Corrupt Practices Act, payments to foreign officials made in connection with the promotion or demonstration of company products or services are legal.

Question 11

In its mission to promote ethical organizational behavior and increase the costs of unethical behavior, the Federal Sentencing Guidelines for Organizations establishes a definition of an organization that is so broad as to prompt the assessment that "no business enterprise is exempt."

Question 12

Grease payments are illegal under the Foreign Corrupt Practices Act.

Question 13

A company can be found in violation of the Foreign Corrupt Practices Act even if its bribe is unsuccessful.

Question 14

The Foreign Corrupt Practices Act focuses on disclosure, which requires corporations to fully reveal any and all transactions conducted with foreign officials and politicians, in line with the Securities and Exchange Commission provisions.

Question 15

The base fine of an organization sentenced under the Federal Sentencing Guidelines for Organizations is always calculated after its culpability score.

Question 16

The Credit Rating Agency and the New York Stock Exchange are the only bodies authorized to enforce the Foreign Corrupt Practices Act.

Question 17

Under no circumstances can the culpability score be increased or decreased.

Question 18

The Federal Sentencing Guidelines for Organizations table factors in both the nature of the crime and the amount of the loss suffered by the victim.

Question 19

The processing of governmental papers, such as visas, is an example of a routine governmental action.

Question 20

The sentence of an organization punished under the Federal Sentencing Guidelines for Organizations is calculated through a three-step process: determination of mitigating factors, evaluating the credit rating, and the determination of base fine.

Question 21

The Revised Federal Sentencing Guidelines for Organizations required evidence of actively promoting ethical conduct rather than just complying with legal obligations.

Question 22

The creation of the Public Company Accounting Oversight Board (PCAOB) as an independent oversight body was an attempt to reestablish the perceived independence of auditing companies that faced serious questioning after several corporate scandals.

Question 23

The original Volcker rule sought to allow trading of all derivatives without discrimination.

Question 24

In September and October 2008, financial markets around the world suffered a severe crash as a consequence of aggressive lending to subprime borrowers in a deregulated environment.

Question 25

In order to minimize an organization's culpability score, the Federal Sentencing Guidelines for Organizations prescribes that its employees be granted absolute discretionary authority.

Question 26

Title III of the Sarbanes-Oxley Act requires senior auditors to rotate off an account every five years and junior auditors every seven years.

Question 27

The Financial Stability Oversight Council is not authorized to act against a bank that poses a threat to the financial stability of the United States if its assets exceed $50 billion.

Question 28

According to the Federal Sentencing Guidelines for Organizations, criminal offenses, whether actual or suspected, must generate an appropriate response, analysis, and corrective action in order to establish an effective compliance program.

Question 29

The Sarbanes-Oxley Act is a legislative response to the corporate accounting scandals of the early 2000s that covers the financial management of businesses.

Question 30

The Volcker rule proposed that there should be a key restriction in the legislation to limit the ability of banks to trade on their own accounts.

Question 31

Title VI of the Sarbanes-Oxley Act provides additional funding and authority to the Securities and Exchange Commission to follow through on all the new responsibilities outlined in the act.

Question 32

As an oversight board, the Public Company Accounting Oversight Board (PCAOB) was charged with maintaining compliance with established standards and enforcing rules and disciplinary procedures for those organizations that found themselves out of compliance.

Question 33

Title IX of the Sarbanes-Oxley Act requires CEOs and CFOs to certify their periodic reports and imposes penalties for certifying a misleading or fraudulent report.

Question 34

The Dodd-Frank Wall Street Reform and Consumer Protection Act Legislation was established to expand the foreign trade sector.

Question 35

The Consumer Financial Protection Bureau is a government agency within the Federal Reserve that oversees financial products and services.

Question 36

Title VIII of the Sarbanes-Oxley Act imposes fines on employees for lying to other employees regarding company benefits and pay.

Question 37

The concept of an ethical culture was recognized, for the first time, as a foundational component of an effective compliance program under the Revised Federal Sentencing Guidelines for Organizations.

Question 38

The Financial Stability Oversight Council is led by the Treasury secretary and is made up of top financial regulators.

Question 39

The authority of the Consumer Financial Protection Bureau does not extend to examining and enforcing regulations for banks and credit unions if their assets exceed $10 billion.

Question 40

Under the Federal Sentencing Guidelines for Organizations, a judge has the discretion to impose a so-called death penalty upon an organization, where the fine matches all the organization's assets.

Question 41

Which of the following legislations required full disclosure of funds that were taken out of or brought into the United States before the Foreign Corrupt Practices Act was introduced?

A)The Trade Commission Act
B)The Consumer Protection Act
C)The Bank Secrecy Act
D)The Government Corporate Control Act

Question 42

Which of the following statements is true of the Federal Sentencing Guidelines for Organizations?

A)It holds organizations liable only for fraudulent activities in foreign markets.
B)It holds businesses liable for the criminal acts of their employees and agents.
C)It decreases the costs of unethical behavior.
D)It covers very few business crimes.

Question 43

Which of the following statements is true of the culpability score?

A)It can be increased or decreased according to predetermined factors.
B)It is calculated before the base fine of an organization is determined by the Federal Sentencing Guidelines for Organizations.
C)It plays no role in calculating monetary fines under the Federal Sentencing Guidelines for Organizations.
D)It is a multiplier of the base fine of an organization with a maximum of 2.

Question 44

Which of the following is a legislation that was introduced to control bribery and other less obvious forms of payment to overseas officials and politicians by American publicly traded companies?

A)The Foreign Assistance Act
B)The Fair Credit Reporting Act
C)The Fair Business Standards Act
D)The Foreign Corrupt Practices Act

Question 45

Which of the following is a difference between grease payments and bribes under the Foreign Corrupt Practices Act?

A)Unlike grease payments, bribes induce foreign officials to act in violation of their lawful duty.
B)Unlike grease payments, bribes include donations to bona fide charitable organizations.
C)Unlike grease payments, bribes are meant to secure a routine governmental action.
D)Unlike grease payments, bribes are used to facilitate processes approved of by law.

Question 46

Brendon Inc. required a permit to open its business in a foreign country. Although it had met all the requirements for the permit, the officials delayed providing Brendon Inc. with the permit. To expedite the process, the company made a payment to a high-ranking official who has the authority to grant the permit. Which of the following types of payment does this scenario exemplify?

A)Accentuation payment
B)Facilitation payment
C)Explicit payment
D)Implicit payment

Question 47

Which of the following key U.S. legislations is an attempt to discourage, if not prevent, illegal conduct within organizations?

A)The U.S. Federal Sentencing Guidelines for Organizations
B)The U.S. Federal International Customary Law
C)The U.S. Federal Procurement Regulations System
D)The U.S. Federal Standards for Commercial Services

Question 48

Which of the following legislations could fine companies for failing to disclose bribes and other forms of payments to foreign officials before the Foreign Corrupt Practices Act was introduced?

A)The Securities and Exchange Commission
B)The Dodd-Frank Wall Street Reform and Consumer Protection Act
C)The U.S. Federal Sentencing Guidelines for Organizations
D)The Ethics Resource Center

Question 49

Which of the following government agencies jointly enforce the Foreign Corrupt Practices Act?

A)The U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC)
B)The U.S. Congress Office of Compliance and the Federal Judicial Center
C)The U.S. National Economic Council (NEC) and the Government Accountability Office (GAO)
D)The U.S. Department of Commerce and the Office of Financial Research

Question 50

Which of the following is true of the penalties under the Federal Sentencing Guidelines for Organizations (FSGO)?

A)They do not include monetary fines.
B)They include organizational probation.
C)They are not levied on small businesses.
D)They are levied only on foreign corporations.

Question 51

Which of the following is true of the penalties under the Foreign Corrupt Practices Act?

A)The Department of Justice can enforce criminal penalties of up to $20 million per violation for corporations and other business entities.
B)The Securities and Exchange Commission can impose a civil fine of up to $2,000 per violation upon corporations and other business entities.
C)Penalties under the books and record-keeping provisions can reach up to $25 million and 5 years' imprisonment for individuals and up to $50 million for organizations.
D)Officers, directors, stockholders, employees, and agents are subject to a fine of up to $250,000 per violation and imprisonment for up to five years.

Question 52

Which of the following is true of facilitation payments under the Foreign Corrupt Practices Act (FCPA)?

A)The FCPA recognizes them as bribes or an illegal form of payment.
B)The FCPA permits them if they secure exclusive contracts from foreign officials.
C)The FCPA finds them acceptable if they expedite a routine governmental action.
D)The FCPA finds them acceptable if they involve securing new businesses overseas.

Question 53

Sebastian and Amy are arguing over secondary legislations that were in place prior to the passing of the Foreign Corrupt Practices Act (FCPA). Amy is of the opinion that the FCPA encompasses all secondary measures that were in use to prohibit corrupt practices. Sebastian disagrees with Amy on this point. Which of the following, if true, would strengthen Amy's argument?

A)The FCPA requires only partial disclosure of funds that were taken out of or brought into the United States.
B)The FCPA does not specify that using wire communications to transact fraudulent schemes is illegal.
C)The FCPA requires corporations to fully disclose all transactions conducted with foreign officials in line with the SEC provisions.
D)The FCPA does not fine companies for failing to disclose payments made to foreign officials under its securities rules.

Question 54

Which of the following did the government formulate to penalize corporate wrongdoing?

A)The Glass-Steagall Act
B)The Sarbanes-Oxley Act
C)The Gramm-Leach-Bliley Act
D)The Taft-Harley Act

Question 55

Under the Foreign Corrupt Practices Act, payments to foreign officials in order to expedite or secure the performance of a routine governmental action are known as _____.

A)grease payments
B)induced payments
C)implicit payments
D)accentuating payments

Question 56

Under the Foreign Corrupt Practices Act, payments made with the knowledge that any portion of the payment is to be passed along to a foreign official for a prohibited purpose under the Foreign Corrupt Practices Act are known as _____.

A)grease payments
B)facilitation payments
C)bribes
D)costs

Question 57

Under the Foreign Corrupt Practices Act, payments that are acceptable (legal) provided they expedite or secure the performance of a routine governmental action are called _____.

A)facilitation payments
B)accentuation payments
C)alternative payments
D)implicit payments

Question 58

Why was the Foreign Corrupt Practices Act criticized?

A)The act does not require full disclosure of funds that were taken out of or brought into the United States.
B)The act does not address the illegality of using the U.S. mail or wire communications to transact a fraudulent scheme.
C)The act requires corporations to fully disclose all transactions conducted with foreign officials in line with the SEC provisions.
D)The act formally recognizes the facilitation payments, which would otherwise be acknowledged as bribes.

Question 59

Which of the following statements is true of the Foreign Corrupt Practices Act?

A)It is jointly enforced by the Federal Bureau of Investigation and the Ministry of Internal Affairs.
B)It encompasses all the measures that were previously used to control unethical overseas transactions by U.S. corporations.
C)It replaced the Dodd-Frank Wall Street Reform and Consumer Protection Act.
D)It ignores stipulations laid down by the Bank Secrecy Act and the Mail Fraud Act.

Question 60

Which of the following is a routine governmental action?

A)Allocating funds for companies to make facilitation payments overseas
B)Providing legal immunity for the employees of foreign companies
C)Providing police protection for the transit of goods across a country
D)Accepting payment from a foreign company in return for an exclusive contract

Question 61

The illegal and unethical practice of providing old (or early) investors above-average returns on their investment with funds raised from new (or late) investors in the absence of any real business operation to generate profits is referred to as the _____.

A)Ponzi scheme
B)Jamaican switch
C)Pigeon drop
D)Tobashi scheme

Question 62

The maximum penalty that a judge can impose upon an organization for violating the Federal Sentencing Guidelines for Organizations is a penalty worth:

A)a tenth of the organization's assets.
B)a quarter of the organization's assets.
C)half of the organization's assets.
D)the full amount of the organization's assets.

Question 63

The _____ is a government agency established to prevent banks from failing and otherwise threatening the stability of the U.S. economy.

A)U.S. Congress Office of Compliance
B)Financial Stability Oversight Council
C)Consumer Financial Protection Bureau
D)Office of Financial Research

Question 64

Which of the following requirements is included in the status of organizational probation under the Federal Sentencing Guidelines for Organizations (FSGO)?

A)Reporting a business's financial condition to the court on a periodic basis
B)Reporting confidential details of all employees to the court on a periodic basis
C)Reporting progress to the FSGO in expediting or securing the performance of routine governmental favors
D)Reporting progress to the FSGO in making monetary contributions to the U.S. political parties

Question 65

The _____ refers to the legislation that was promoted as the "fix" for the extreme mismanagement of risk in the financial sector that led to a global financial crisis in 2008-2010.

A)Glass-Steagall Act
B)Sarbanes-Oxley Act
C)Dodd-Frank Wall Street Reform and Consumer Protection Act
D)Gramm-Leach-Bliley Financial Services Moderation Act

Question 66

Which of the following is true of the Sarbanes-Oxley Act (SOX)?

A)It helped disband the Public Company Accounting Oversight Board.
B)It protects employees of companies who provide evidence of fraud.
C)It prohibits a CEO from signing the company's federal income tax return.
D)It considers whistle-blowing a white collar crime.

Question 67

The _____ is a legislative response to the corporate accounting scandals of the early 2000s that cover the financial management of businesses.

A)Sarbanes-Oxley Act
B)Glass-Steagall Act
C)Bland-Allison Act
D)Taft-Harley Act

Question 68

In September and October 2008, financial markets around the world suffered a severe crash as:

A)there was aggressive lending to subprime borrowers in a deregulated environment.
B)the Public Company Accounting Oversight Board (PCAOB) was disbanded, allowing auditors to work unregulated.
C)the assets of American overseas companies were seized by the Federal Sentencing Guidelines for Organizations.
D)all publicly traded firms only used the services of auditors affiliated with the Public Company Accounting Oversight Board.

Question 69

The _____ states that there should be a key restriction in the legislation to limit the ability of banks to trade on their own accounts (termed proprietary trading).

A)Sarbanes-Oxley Act
B)Volcker rule
C)Campbell's rule
D)Bland-Allison Act

Question 70

The _____ is a fine that is set high enough by the Federal Sentencing Guidelines for Organizations to match all the assets of an organization and effectively puts the organization out of business.

A)prohibition payment
B)death penalty
C)facilitation payment
D)relative penalty

Question 71

The _____ is a government agency within the Federal Reserve that oversees financial products and services.

A)Consumer Financial Protection Bureau
B)Ministry of Internal Affairs
C)Department of Commerce
D)Public Company Accounting Oversight Board

Question 72

Which of the following statements is true of Title II of the Sarbanes-Oxley Act?

A)It allows public accounting firms to audit a company whose CEO was employed by that accounting firm within the past 12 months.
B)It encompasses the Public Company Accounting Oversight Board and allows publicly traded companies to be audited independently.
C)It requires senior auditors to rotate off an account every five years and junior auditors every seven years.
D)It permits auditors to keep written communications between management and themselves private.

Question 73

Title IX of the Sarbanes-Oxley Act focuses on:

A)corporate social responsibility.
B)enhanced financial disclosures.
C)white-collar crime penalty enhancements.
D)corporate fraud and accountability.

Question 74

Which of the following is true of the effective compliance program prescribed by the Federal Sentencing Guidelines for Organizations?

A)A high-level official (such as a corporate ethics officer) must be in charge of and accountable for the compliance program.
B)Individuals should be granted excessive discretionary authority, as that would reduce the risk of criminal conduct.
C)Criminal offenses must generate an appropriate response, analysis, and corrective action, but not on the basis of suspicion.
D)An organization must be strict to address criminal misconduct in a consistent manner but should avoid penalizing employees for it.

Question 75

The introduction of the _____ placed more effective controls over bribing practices and less obvious forms of payment to foreign officials and politicians by American publicly traded companies pursuing international growth.

Question 76

Title VIII of the Sarbanes-Oxley Act addresses issues related to _____.

A)enhanced financial disclosures
B)commission resources and authority
C)the estimation of auditing fees
D)corporate and criminal fraud accountability

Question 77

Under the Federal Sentencing Guidelines for Organizations, the death penalty:

A)can only be conferred upon multinational corporations and not on smaller businesses.
B)allows the state to appropriate half of the total assets of an organization.
C)is warranted where the organization was operating primarily for a criminal purpose.
D)cannot be levied upon organizations if it means putting them out of business.

Question 78

The creation of the _____ was an attempt to reestablish the perceived independence of auditing companies after the corporate accounting scandals of the early 2000s.

A)Securities and Exchange Commission
B)Consumer Financial Protection Bureau
C)Federal Labor Relations Authority
D)Public Company Accounting Oversight Board

Question 79

Which of the following responsibilities was granted to the Consumer Financial Protection Bureau (CFPB)?

A)Authority to act if a bank with more than $50 billion in assets poses a threat to the financial stability of the United States
B)Authority to limit the ability of banks to trade on their own accounts
C)Authority to examine and enforce regulations for banks and credit unions with assets over $10 billion
D)Authority to conduct studies regarding consolidation of accounting firms

Question 80

The formula used to calculate the total fine sentenced by the Federal Sentencing Guidelines for Organizations (FSGO) is:

A)the base fine multiplied by the culpability score.
B)the base fine plus the culpability score.
C)the base fine minus the culpability score.
D)the base fine divided by the culpability score.