1.

Character traits associated with ethical leadership include:

a. Integrity
b. Honesty
c. Trustworthiness
d. All of the above
Answer D: All of the above
2. In the interview process questions that are not related to the persons ability to do the job should be
avoided, including questions regarding the following subjects:
a. Marital status
b. Age
c. Religion
d. All of the above
Answer D: All of the above
3. In general terms, the duties expected of a professional are the maintenance of what five terms?
a. Doubt, objectivity, competence, expectations, and virtue
b. Security, integrity, competence, expectations, and judgment
c. Objectivity, integrity, competence, confidentiality, and discipline
d. Due care, honesty, planning, fiduciary duty, and

ethical

conflict

resolution

Answer: c. Objectivity, integrity, competence, confidentiality, and discipline

4. Due to financial scandals in 2002, the United State Federal Legislature created what Board?
a. Sarbanes-Oxley
b. PCAOB
c. AICPA
d. TSBPA
Answer: b. PCAOB
5. According to the Senate Subcommittee that investigated Enron, the duties of the Board of Directors of
a listed company include
a. reviewing the listed companys overall business strategy
b. selecting and compensating the listed companys senior executives
c. evaluating the listed companys outside auditor
d. overseeing the preparation of the listed companys financial statements
e. all of the above
Answer: E. all of the above

6. Which cultural value is more typically associated with Japan?

a. Personal Rights
b. Obligation to Savior
c. Obligation to company
d.

Religious

Values

Answer: c. Obligation to company

7. Which of the following is not an essential feature of a profession according to the Brooks text?
a. Extensive training
b. Provision of important services to society
c. High compensation
d. training and skills largely intellectual in nature
Answer: d. training and skills largely intellectual in nature
8. What are considered core values of the accounting profession?
a. Integrity
b. Objectivity, based upon independent judgment
c. Confidentiality
d. Competence
e. All the above
Answer: e. All the above
9. Of the following, which is the most important aspect of a corporate ethics culture?
a. Formal Ethics Code
b. Ethics Credo
c. Ethics Communication
d. Ethical leadership by executives commonly called tone at the top
Answer: d. Ethical leadership by executives commonly called tone at the top
10. Corporations expect that a professional accountant in its employ will perform fiduciary duties with
which of the following qualities?
a. Competence
b. Integrity
c. Confidentiality
d. Objectivity
e.

All

Answer: e. All of the above

of

the

above

11. Key decisions driving hiring and firing decisions should be based upon:
a. Marital Status
b. National Origin and Race
c. Age
d. Religion
e. Job performance and ability to do the job
Answer: e. Job performance and ability to do the job
12. Facilitating payments as defined by the FCPA are problematic because the payments
a. Add to the cost of doing business
b. Undermine merit based purchasing
c. Risk possible negative consequences from competing stakeholders
d. All of the above
Answer: d. All of the above
13. Directors and executives have found that support of stakeholders is essential to the optimal
achievement of
a. Medium-term corporate objectives
b. Long-term corporate objectives
c. Short-term corporate objectives
d. All of the above
e. a and b
Answer: b. Long-term corporate objectives
14. According to Kohlberg, this is the stage where moral individuals develop a principled conscience and
adhere to moral and social codes because the codes are the moral principles that guide society.
a. First
b. Middle
c. Fifth
d. Sixth
e. All the above
Answer: c. Fifth (In Stage five (social contract driven), the world is viewed as holding different
opinions, rights and values. Such perspectives should be mutually respected as unique to each person or
community. Laws are regarded as social contracts rather than rigid edicts. Those that do not promote
the general welfare should be changed when necessary to meet the greatest good for the greatest
number of people)
15. General Values found in the majority of Professional Codes of Ethics that Accountants are to follow
include

a. Professional competence
b. Due professional care
c. Proper supervision
d. All of the above
e. None of the above
Answer: d. All of the above
16. Behavior that is uncivil does not include:
a. Slamming doors
b. Profanity
c. Throwing objects
d. None of the above
Answer: d. None of the above
17. A conflict of interest occurs when:
a. The defense against influences is managed to ensure that all employees are aware of the existence and
consequences.
b. When the independent judgment of a person is swayed, or might be swayed, from making decisions in
the best interest of others who are relying on the judgment.
c. Guidelines prove helpful to specify when it may be acceptable to give or accept a gift or preferential
treatment.
d. All of the above.
e. None of the above.
Answer: b. When the independent judgment of a person is swayed, or might be swayed, from making
decisions in the best interest of others who are relying on the judgment.
18. Expectations for behavior of professional accountants are and will be embodied in:
a. Court decisions
b. Commonly understood standards of practice
c. Research studies and articles
d. Regulators guidelines
e. All of the above
Answer: e. All of the above
19. Which of the following are the rationalizations of unethical actions according to Joseph Heath?
a. Denial of responsibility
b. Denial of injury
c. Appeal to higher loyalties
d. Denial by the victim
e. All of the above

20. A typical board of directors duties includes all of the following except:
a. Reviewing the companys overall business strategy
b. Evaluating the companys outside auditor
c. Overseeing the day-to-day activities of the company
d. Monitoring company performance
Answer: c. Overseeing the day-to-day activities of the company
21. Which of the following factors is not considered by the U.S. Department of Justice when deciding
when to prosecute directors with non-compliance with SOX requirements?
a. Whether the compliance program is substantive or just a paper sham
b. If there is staff sufficient to monitor and audit the compliance program
c. Whether management is enforcing the program
d. The size of the public company and its related ability to implement the program
e. All of the above
Answer: d. The size of the public company and its related ability to implement the program
22. Professional accountants are best suited to play the dominant or supporting roles in design,
preparation and management of a variety of areas that are vital to corporate governance including all of
the following except:
a. Ethical corporate culture
b. Stakeholder interests assessment
c. Tax planning
d.
Ethics

rick

management

systems

Answer: c. Tax planning

23.The following matters make up the fraud triangle except

a. Knowledge or capability
b. Motive
c. Rationalization
d. Opportunity
Answer: a. Knowledge or capability
24. Under state laws, directors should act in good faith and in the best interest of the corporation and its
shareholders. Courts generally discuss a number of different types of fiduciary obligations. Select out of
the following the answer(s) that would best describe the directors fiduciary obligations.
a. The duty of obedience requires a director to avoid committing beyond the scope of the powers of a
corporation as defined by its charter
b. The duty of loyalty dictates that a director must not allow his personal interest to prevail over the
interests of the corporation

c. The duty of care requires a director to be diligent and prudent in managing the corporations affairs
d. All of the above
Answer: d. All of the above
25.Which of the following is not a guideline for acceptance of gifts or preferential treatment discussed in
the Brooks text?
a. What is the FMV?
b. Is it nominal or substantial?
c. Is it legal?
d. What are the circumstances?
e. What is the companys policy?
Answer: a. What is the FMV?
26. The professional accountant should be dedicated to serving the public interest. To achieve this the
IFAC Code of Ethics for Professional Accountants indicates compliance with 5 fundamental principles.
These five principles are
a. Objectivity, Independence, Professional Behavior, Integrity, and Due Care
b. Objectivity, Reliability, Professional Appearance, Integrity, and Independence of Mind
c. Integrity, Objectivity, Professional Behavior, Competence, and Confidentiality
d. None of the above
Answer: c. Integrity, Objectivity, Professional Behavior, Competence, and Confidentiality
27. Which of the following is a false statement concerning Circular 230 lists of best practices?
a. Cash IRS checks on behalf of clients
b. Provide the highest level of quality, professional care, acting fairly, and with integrity
c. Avoid conflicts of interest when representing more than one client
d. Not advise the client to take a patently improper or frivolous position
Answer: a. Cash IRS checks on behalf of clients
28.Which of the following is an element in the fraud triangle?
a. Motive
b. Rationalization
c. Opportunity
d. All of the above
Answer: d. All of the above
29. Which of the following is a false statement?
a. Conflict of interests have been a subject of extreme importance in recent scandals in which employees,
agents and professionals failed to exercise proper judgment on behalf of their principals.

b. A conflict of interest occurs when the independent judgment of a person is swayed, or might be
swayed, from making decisions in the best interest of others who are relying on that judgment.
c. A professional accountant is expected to make judgments that are in the public interest.
d. An executive is not expected to make judgments in the best interest of the company.
Answer: d. An executive is not expected to make judgments in the best interest of the company.
30. In Maslows Hierarchy of Needs, which of the following is a physical need?
a. Fulfillment
b. Affinity
c. Safety
d. Self-actualization
Answer b. Affinity (SEX ??) he suggested that people first need to satisfy their basic physiological needs
food, shelter, sleep, sex, etc. Once these requirements have been secured then safety needs (protection,
physical security, resources, job security, income, etc.)
31. To remedy the concerns over a conflict of interest, which general approaches should be considered?
a. Disclosure to those stakeholders relying on the decision
b. Management of the conflict of interest so that benefits of the judgment made are greater than the
costs
c. Avoidance
d.
All
of
the
above
Answer: d. All of the above
________________________________________________________________________

32. Corporations are now increasingly realizing that they are accountable:
a.
b.
c.
d.
e.

Legally to shareholders
Legally to all stakeholders
Strategically to additional stakeholders
(a) and (b)
(a)
Answer: c.

33.
a.
b.
c.
d.
e.

and
Strategically

(c)
to

additional

stakeholders

The companys internal auditors and the Ethics Officer should report:
Day-to-day to the CEO
Day-to-day to the Audit Committee of the Board of Directors
Regularly to the Audit Committee of the Board of Directors without management being present
(a) and (c)
(a)
and

(b)

Answer: c. Regularly to the Audit Committee of the Board of Directors without management being
present

34. 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
Answer: Principles are more useful than rules because principles can be interpreted as new
circumstances require.
35. Experience has revealed that, to be effective, a code must be reinforced by:
a.
b.
c.
d.
e.

Tone at the top

Ethics officer and internal auditors
A comprehensive ethical culture
Principles, rules and examples
All
of
Answer: e.

the

above

All of the above

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

a.
b.
c.
d.
e.

Normal definitions of risk are too narrow for stakeholder accountability

Assign responsibility, develop follow-up processes and board review
Discovery and remediation are essential
The code of ethics must be reviewed by independent parties
An
ethics
risk
exists
when
expectations
of
stakeholders

may

not

be

met

Answer: a. Normal definitions of risk are too narrow for stakeholder accountability
37. A conflict of interest exists when a given decision maker (D) and another person (P) are in the following
situation:
a.
b.
c.
d.
e.

D has to exercise judgement in Ps behalf

P has to exercise judgement in Ds behalf
D has a special interest that interferes with proper judgement
(a) and (b)
(a)
and
Answer: e.

(c)

(a) and (c)

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

P has a special interest that interferes with proper judgement

D may have to exercise judgement in Ps behalf
D has a special interest that interferes with proper judgement
(a) and (b)

e.

(b)

and

(c)

Answer :b. D may have to exercise judgement in Ps behalf

39. This is the preferred approach to deal with conflicts of interests
a.
b.
c.
d.
e.

Management
Disclosure
Remediation
Avoidance
Awareness
Answer: d. Avoidance

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

a.
b.
c.
d.
e.

Shareholders and stakeholders goals

Managers and stakeholders goals
Shareholders and managers goals
Principals and shareholders goals
Agents
and

stakeholders

goals

Answer: c. Shareholders and managers goals

41. The 20/60/20 rule states that the total percent of employees who could commit a fraudulent act is:
a.
b.
c.
d.
e.

20%
60%
80%
100%
None

of

the

above

Answer: a. 20%
42. Which of the following is not a characteristic identified by forensic experts in prospective fraud
situations?
a.
b.
c.
d.
e.

High intelligence
Greed
Need for whatever is taken
Opportunity to take advantage
Low
probability

of

Answer: c. Need for whatever is taken

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

a.
b.

Preventing, detecting and punishing violations of the law

Define organizational values and encourage employee commitment

being

caught

c.
d.
e.

Improve image and relationship with stakeholders

Protect management from blame
All
of

the

above

Answer: a. Preventing, detecting and punishing violations of the law

44. The primary focus of an integrity-based ethics program is:
a.
b.
c.
d.
e.

Preventing, detecting and punishing violations of the law

Define organizational values and encourage employee commitment
Improve image and relationship with stakeholders
Protect management from blame
All
of
the
Answer: b. Define

organizational

values

and

encourage

above
employee

commitment

45. The most important factor in encouraging employee observance to an ethics program is that
employees perceive that it is:
1.
2.
3.
4.
5.

Compliance-based
Value-based
Achievement oriented
Stakeholder-based
Externally oriented
Answer: b: Value

46.) Building trust within an organization can have favorable impact on employees willingness to share
information and ideas in a process of:
a.
b.
c.
d.
e.

Ethical awareness
Ethical awakening
Ethical renewal
Ethical wave
None of the above
Answer:

47. A Conference Board survey identified the following rationale for developing codes of ethics:
a.
b.
c.
d.
e.

Make employees aware that adherence is critical to bottom-line success

Provide a statement of dos and donts
Discuss what is expected in stakeholder relationships
Establish values and mission
All
of
the
Answer: e. All of the above

48. This code deals with ethics principles plus additional examples:

above

a.
b.
c.
d.
e.

Credo
Code of ethics
Code of conduct
Code of practice
All of the above
Answer:

49. Which of the following is not a mechanism for monitoring a code of ethics?
a.
b.
c.
d.
e.

Ethics audit or internal audit procedures

Reviews by legal department
Awards and bonuses
Annual sign-off by employees
Employee

surveys

50. Which of the following is not an example of emerging public accountability standards or initiatives?
a.
b.
c.
d.
e.

SOX-404
GRI
AA-1000
FTSE4Good
All

of

the

above

the

above

Answer: a. SOX-404

51. SOX imposed the following new penalties for executives:

a.
b.
c.
d.
e.

Fines
Suspension
Criminal prosecution for executives
Return of ill-gotten gains
All
of
Answer: e. All of the above

52. The following elements are essential features of a profession:

a.
b.
c.
d.
e.

Extensive training, license or certification, and provision of important services to society

Extensive training, primarily intellectual skills, and representation by professional organizations
Extensive training, provision of important services to society, and primarily intellectual skills
License or certification, representation by professional organizations, and autonomy
License or certification, autonomy, and provision of important services to society
Answer: a.

Extensive training, license or certification, and provision of important services to society

53. The following values not necessary for an accounting professional:

a.
b.
c.
d.
e.

Honesty
Integrity
Objectivity
A primary commitment to self-interest
All
but
one

of

the

above

Answer: d.A primary commitment to self-interest

54. The following duties are essential to maintaining a fiduciary relationship in the accounting profession:
a.
b.
c.
d.
e.

Development and maintenance of required knowledge and skills

Maintenance of trust
Maintenance of an acceptable personal reputation
All of the above
(a)
and

(b)

only

Answer: e. (a) and (b) only

55. Professional Accountants, in their fiduciary role, owe primary loyalty to:
a.
b.
c.
d.
e.

The accounting profession

The client
The general public
Government regulations
All

of

the

above

Answer: c.The general public

56. According to Kohlberg, at this stage of moral reasoning, fear of punishment and authorities are a motive
for doing right:
a.
b.
c.
d.
e.

Pre-conventional
Conventional
Post-conventional
Autonomous
Principled
Answer: a.

Pre-conventional

57. According to Kohlberg, at this stage of moral reasoning, adherence to moral codes or to codes of law and
order are a motive for doing right:
a.

Pre-conventional

b.
c.
d.
e.

Conventional
Post-conventional
Autonomous
Principled
Answer: b. Conventional

58. Which of the following is not a fundamental principle in codes of conduct for professional accountants?
a.
b.
c.
d.
e.

Act in the clients best interest

Objectivity and independence
Maintain the good reputation of the profession
Maintain confidentiality
Not
to
be
associated
Answer: a.

with

misleading

information

Act in the clients best interest

59. If a professional accountant is billing an audit client for more hours than those actually worked, he will
be violating the following fundamental principle:
a.
b.
c.
d.
e.

Objectivity
Professional due care
Integrity
Confidentiality
All

of

the

above

Answer: c. Integrity
60. If a professional accountant is auditing a public company and she receives company shares as payment
for her audit services, she will be violating the following fundamental principle:
a.
b.
c.
d.
e.

Integrity
Objectivity
Professional due care
Confidentiality
All

of

the

above

Answer: b. Objectivity

61. A professional accountant is auditing client A and providing consulting services to client B. Both clients
are in the same industry. If the professional accountant uses specific information from client As audit to
prepare a business plan for client B, he will be violating the following fundamental principle:
a. Integrity
b. Objectivity
c. Professional due care
d. Confidentiality

e.

All

of

the

above

Answer: d. Confidentiality

62. The adoption of the following measures would reduce the expectation gap and lessen public
misunderstanding of the auditor's role
a.
b.
c.
d.
e.

Publish a statement of management responsibility

Auditor to report annually to audit committee
Expand audit report to clarify auditor's role and the level of assurance
(a) and (b)
(a)
and

(c)

Answer: e. (a) and (c)

63. The recommendation of appointment and review of the external auditors by the audit committee is an
example of:
a.
b.
c.

Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation
Safeguards reducing the risk of conflict of interest between an auditor and management
Safeguards reducing the risk of conflict of interest within a professional accounting firms own systems
and procedures
d. All of the above
e. (a)
and
(c)
only
Answer: b. Safeguards reducing the risk of conflict of interest between an auditor and management
64. Using partners who do not report to audit partners for the provision of non-assurance services to an
assurance client would be an example of:
a.
b.
c.
d.
e.

Safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation
Safeguards reducing the risk of conflict of interest within a client
Safeguards reducing the risk of conflict of interest within a professional accounting firm
All of the above
(a)
and
(c)
only
Answer" c.

Safeguards reducing the risk of conflict of interest within a professional accounting firm

65. The external review of an audit firms quality control system is an example of:
a.
b.
c.
d.
e.

Safeguards reducing the risk of conflict of interest within the audit profession
Safeguards reducing the risk of conflict of interest within a client
Safeguards reducing the risk of conflict of interest within a professional accounting firm
All of the above
(a) and (c) only

66. This organization is developing an international code of conduct for professional accountants:

a.
b.
c.
d.
e.

International Accounting Standards Board

European Federation of Accountants
Financial Accounting Standards Board
Public Accounting Oversight Board
International
Federation
Answer: e.

of

Accountants

International Federation of Accountants

67. This organization issues auditing standards, carries out inspections of public accounting firms auditing
U.S. public clients, and imposes sanctions when applicable:
a.
b.
c.
d.
e.

CPAB
PCAOB
SEC
FASB
AICPA
Answer: b PCAOB

68. This organization can issue auditing standards in the U.S.:

a.
b.
c.
d.
e.

AICPA
FASB
SEC
PCAOB
All
Answer: a.

of

the

above

AICPA

69. A professional accounting firm has several audit and tax clients; however, a single client represents 40%
of the firms revenue. This situation could result in the following threat to professional independence:
a.
b.
c.
d.
e.

Self-review
Intimidation
Advocacy
Familiarity
Over-dependence
Answer: E

70. A professional accountant has been the partner in charge of a particular audit client for the past eight
years. This situation could result in the following threat to professional independence:
a.
b.
c.
d.
e.

Self-review
Intimidation
Advocacy
Familiarity
None
Answer: d

of

the

above

71. A new audit client was taken on by a professional accountants firm. The fee for this clients audit
engagement is significantly lower than that charged by the prior accountants. This situation could result
in the following threat to professional independence:
a.
b.
c.
d.
e.

Self-review
Intimidation
Advocacy
Familiarity
None
Answer: b.

of

the

above

Intimidation

72. Which of the following is not a dimension of the COSO Enterprise Risk Framework?
a.
b.
c.
d.
e.

Strategic
Monitoring
Operations
Reporting
Compliance

73. Which of the following is not a component of the COSO Enterprise Risk Framework?
a.
b.
c.
d.
e.

Risk assessment
Risk review
Internal environment
Information and communication
Control

activities.

Answer: b. Risk review

74. Ethics and ethical corporate culture should likely play a vital role in setting:
a.
b.
c.
d.
e.

Control environment
Risk assessment
Information and communication
Monitoring
Control
Answer: a.

Control

activities
environment

75. Which of the following is a source of risk identified by both the AICPA/CICA and the Institute of
Internal Auditors:
a.
b.
c.
d.

Environmental
Informational
Financial
Operational

e.

All
Answer: e.

of
All

the
of

above
the

above

76. What is the recommended strategy when stakeholders potential for threat is HIGH and the
stakeholders potential for cooperation is HIGH?
a. Monitor
b. Involve
c. Discuss
d. Defend
e. None
of
the
above
Answer: e.

None

of

the

above

(Collaborate)

77. What is the recommended strategy when stakeholders potential for threat is LOW and the
stakeholders potential for cooperation is HIGH?
a. Monitor
b. Involve
c. Discuss
d. Defend
e. None
of
the
above
Answer: b. Involve
78. The following three performance indicators are recommended by the Global Reporting Initiative:
a.
b.
c.
d.
e.

Economic, environmental and organizational

Environmental, financial and social
Economic, organizational and social
Environmental, financial and organizational
Cultural,
environmental

and

social

Answer: a. Economic, environmental and organizational : NOT sure .. GRI web indicate three
categories: (G3.1s Performance Indicators are organized into categories: Economic, Environment and
Social. The Social category is broken down further by Labor, Human Rights, Society and Product
Responsibility sub-categories.)
79. The following performance component recommended by the Global Reporting Initiative relates to
customer health and safety, marketing communications and customer privacy:
a.
b.
c.
d.
e.

Labor practices
Human rights
Product responsibility
Society
Costumer
Answer: b. Human rights ???

rights

80. Auditors are mandated to assess the clients risk of financial reporting fraud. Auditing standard SAS-99
considers the following a mandatory tool in fraud assessment:
a.
b.
c.
d.
e.

Discussion and brainstorming

Fraud triangle
Interviews with management
Development of fraud training programs
All
of
Answer: e.

All

the
of

above
the

above

81. Which of the following would be the least useful report of ethics risks and opportunities?
a.
b.
c.
d.
e.

By hypernorm value
By shareholder group
By product or service
By corporate objective
By

reputation

driver

Answer: b. By shareholder group

82.Which the following best describes harassment?

a.

Improper behavior considered offensive by the victim, and the perpetrator knows that this is an
offensive behavior
b. Improper behavior considered offensive by society in general, and the perpetrator knows that this is an
offensive behavior
c. Improper behavior not considered offensive by the victim, and the perpetrator knows that this is an
offensive behavior
d. Improper behavior considered offensive by the victim, and the perpetrator does not know that this is an
offensive behavior
e. Improper behavior considered not offensive by the victim, and the perpetrator does not know that this
is
an
offensive
behavior
Answer: b. Improper behavior considered offensive by society in general, and the perpetrator knows
that this is an offensive behavior

83. An employee in charge of counting and depositing cash holdings at end of the day urgently needs some
extra cash to pay her sons medical bills. Using the fraud triangle, this situation likely constitutes:
a.
b.
c.
d.
e.

Motive
Rationalization
Opportunity
(a) and (b)
(a)

and

(c)

Answer: e.

(a)

and

(c)

84. An employee in charge of the costumer service help line needs urgently some extra cash for paying
his sons hospital bills. Using the fraud triangle, this situation likely constitutes:
a.
b.
c.
d.
e.

Motive
Rationalization
Opportunity
(a) and (b)
(a) and (c)

85. An employee who thinks he is being treated unfairly because he is regularly working unpaid overtime,
urgently needs some extra cash. Using the fraud triangle, this situation likely constitutes:
a.
b.
c.
d.
e.

Motive
Rationalization
Opportunity
(a) and (b)
(a)

and

Answer: d. (a)

(c)
and

(b)

86. An employee in charge of the cash register at a busy restaurant steals small sums of money at the end of
the day whenever the cash in the register exceeds the sum of the days bills. He thinks it is fine to do so
because every day there are two or three costumers that pay more than they should.This type of
rationalization is based on:
a.
b.
c.
d.
e.

Everyone else is doing it

Denial of the victim
Condemnation of the condemners
Appeal to higher loyalties
Entitlement
Answer: b. Denial

of

the

victim

87. An employee in charge of writing checks to suppliers in a manufacturing firm steals small sums of money
every month by writing himself a check for the total of the discounts he negotiates with the companys
suppliers. This type of rationalization is based on:
a.
b.
c.
d.
e.

Denial of responsibility
Denial of the victim
Condemnation of the condemners
Everyone else is doing it
Entitlement
Answer: e.

Entitlement

88. An employee in charge of collecting tickets at the entrance of a movie theater lets her friends enter the
theater without paying for tickets. She thinks it is fine to do so because the employees at the popcorn bar
give free popcorn to their friends. This type of rationalization is because:
a.
b.
c.
d.
e.

Denial of responsibility
Denial of the victim
Everyone else is doing it
Appeal to higher loyalties
Entitlement
Answer: c.

Everyone else is doing it

89. The following need is at the top of Maslows Hierarchy of Needs:

a.
b.
c.
d.
e.

Esteem
Respect
Fulfillment
Safety
Affinity
Answer : d.

Safety (Psychological, Safety, Love/Belonging, Esteem and Self Actualization)

90. An important difference between anticipated and unanticipated crises is that:

a.
b.
c.
d.
e.

Unanticipated crises are easier to control than anticipated crises

Unanticipated crises have a less negative reputational impact than anticipated crises
Anticipated crises start much earlier than unanticipated crises
Anticipated crises are less costly than unanticipated crises
Anticipated crises have a longer uncontrolled period than unanticipated

crises

91. Most of the damage is usually done in this phase of a crisis:

a.
b.
c.
d.
e.

Pre-crisis
Reputation restoration
Controlled
Uncontrolled
Post-crisis

92. Which of the following would hinder an organizations code of conduct from functioning properly?
A.
B.
C.
D.
E.

Lack of top management endorsing and supporting the code.

An effective internal control system
Empowering employees ethically to make ethical decisions
Having a due diligence defense for directors and officers
All of the above.

93. A properly functioning ethical code is essential to the following except:

a- The development and maintenance of an ethical corporate culture.
b- An effective internal control system.
c- A due diligence defense for directors and officers.
d- Sending proper signal to external stakeholders.
E- All of the above are results of a proper functioning code.

94. To maintain good client relationship, an auditor must do all of the following except:
a- Define work to be done in fee agreement, if appropriate, provide reasonable estimates of costs.
b- Utilize staff and office automation to provide cost effectiveness and efficient service.
c- Bill periodically and often, rather than allowing fees to accumulate.
d- Generally decline accepting other telephone calls when in conference with the client.
e- All of the above should be done to maintain good client relationship.

95. Forensic experts point out that in most instances of fraud or opportunistic behavior, they begin to
identify prospective perpetrators through the use of what theory?
a) SING
b) Chinese Wall
c) GONE
d) 20/60/20

96. Forensic experts point out that in most instances of fraud or opportunistic behavior, they can begin
to identify prospective perpetrators through the use of the GONE Theory. The acronym, GONE, stands
for circumstances that account for motivation of illicit behavior. What does GONE stand for?
A.
B.
C.
D.
E.

G-Greed
O-Opportunity to take advantage
N-Need for whatever is taken
E-Expectation of being caught is low
All
of

the

above

97. To remedy the concerns over a conflict of interest, three general approaches should be considered
a. Avoidance
b. Disclosure to the those stake holders relying upon the decision
c. Management of the conflict of interest so that the benefits of the judgment made outweigh the costs.
d. All of the above

98. Hypernorms involve the demonstration of the following basic values: Honesty, Fairness,
Compassion, Integrity, Predictability and Responsibility.
a. True
b. False

99. Which of the following is necessary to maintain good client relations?

a. Have written fee agreements.
b. Complete work on time or when promised.
c. Bill periodically and often, rather than allowing fees to accumulate.
d. All of the above.

100. According to the Texas Public Accounting Act Rules regarding Form of Practice, a certificate or
registration holder may practice public accountancy only in the following business organizations:
a. Proprietorship
b. Partnership
c. LLC
d. Corporation
e. All of the above

101. According to 7216 IRS Code, a CPA can disclose confidential client information if he received:
a.
court order
b.
administrative summons from IRS
c.
written consent from the client
d.
All of the above

102. What does the government expect of individuals licensed as a CPA:

a.
b.
c.
d.
e.

Competence in performing services.

Objectivity in the offering of services.
Integrity in client dealings.
All of the above.
None of the above.

103. According to rule 501.52 for the rules of professional conduct, Professional services or
Professional accounting work includes which of the following:
a. Issuing reports or financial statements
b. Providing management or financial advisory or consulting services
c. Preparing tax returns
d. All of the above
e. Only A & B
104.
a.

Which of the following are considered reportable events under the Texas Public Accountancy Act?
The cancellation, revocation or suspension of a drivers license related to a Driving While Intoxicated
related offense

b.
c.
d.
e.

A felony
A crime of moral turpitude
B&C
All of the above

105. In general, the duties expected of a professional CPA are the maintenance of which of the following:
a. Competence
b. Objectivity
c. Integrity
d. All of the above.

106. Which of the following are considered to represent deficiencies in professional codes of conduct:
(a) Consultation on ethical matters is not uniformly encouraged, and may require the hiring of outside
counsel rather than counseling through the professional association.
(b) A fair reporting/hearing process is not always indicated, so members are uncertain whether to come
forward.
(c) Protection is not offered to a whistle blower.
(d) Sanctions are often unclear and their applicability is not defined.
(e) All of the above.

107. Independence of mind is the state of mind that permits the provision of an opinion without being
affected by influences that compromise professional judgment, allowing an individual to act with
integrity, and exercise objectivity and professional skepticism.
(a) True
(b) False

108.

a.
b.
c.
d.
e.

- the state of mind that permits the provision of an opinion without being affected by influences
that compromise professional judgment, allowing an individual to act with integrity, and exercise
objectivity and professional skepticism.
Attention Deficit Disorder or A.D.D.
Obsessive Compulsive Disorder or O.C.D.
Independence of mind or I.O.M.
Post-traumatic Stress Disorder or P.T.S.D.
None of the above

109. To maintain good client relationship, an auditor must do all of the following except:
a. Define work to be done in fee agreement, if appropriate, provide reasonable estimates of costs.
b. Utilize staff and office automation to provide cost effectiveness and efficient service.

c. Bill periodically and often, rather than allowing fees to accumulate.

d. Generally decline accepting other telephone calls when in conference with the client.
e. All of the above should be done to maintain good client relationship.

110. The proper discharge of the ethical values of competence, integrity, honesty, and objectivity relies
substantially, if not primarily, upon
a.
b.
c.
d.

The personal moral values of the Board of Directors involved.

The personal ethical values of the professional accountant involved.
The importance of the values added
The ethical values of the employees

111. A CPA's independence would not be considered to be impaired by which of the following:
a. The CPA has a financial interest in the client.
b. The CPA has a close relative who holds a key position with the client.
c. The CPA had breakfast with the client that morning.
d. All of the above.

112. Attest Service means:

a.

An audit or other engagement required by the Board to be performed in accordance with the auditing
standards adopted by the American Institute of Certified Public Accountants or another national
accountancy organization recognized by the Board.

b.

A review, compilation or other engagement required by the Board to be formed in accordance with
standards for accounting and review services adopted by the American Institute of Certified Public
Accountants or another national accountancy organization recognized by the Board.

c.

An engagement required by the Board to be preformed in accordance with standard for attestation
engagements adopted by the American Institute of Certified Public Accountants or another national
accountancy organization recognized by the Board; or

d.

Any of the assurance service required by the Board to be performed in accordance with professional
standards adopted by the American Institute of Certified Public Accountants or another national
accountancy organization recognized by the Board.

e.

All of the above.

113. When implementing an ethical culture, all items below are important aspects to be
considered in such culture EXCEPT:
A.

Ethical leadership by executive and supervisors.

B.

Organizational focus that stresses care for employees and the community.

C.

Rigid corporate structure where employees are shielded from management.

D.

114.

Perceived fairness, fair treatment of employees.

The 20/60/20 Rule regarding division of the general population into three groups states that:
a. 20% of people would never commit fraud.
b. 60% of people would seek to commit fraud depending on circumstances.
c. 20% of people would seek to commit fraud.
d. Managers underestimate associates and employees unethical behavior.
e. All of the above

115. An ethical culture combines formal and informal elements to guide employees thought and action,
including the following:
a. Ethical leadership by executives and supervisors
b. Reward systems to incorporate ethical considerations
c. Perceived fairness, fair treatment of employees
d. All of the above
e. None of the above.
116.

The Brooks text identified 3 threats to good governance and accountability. Those 3 threats are:

a.

Misunderstanding management and company duties; Failure to identify and manage

work; and Lack of interest.

b. Failure to manage people and familial duties; Misunderstanding SOX; and Lack of codes
of conduct.
a. Misunderstanding employees objectives; Failure to identify the board of directors;
and Co-worker conflicts.
b. Misunderstanding objectives and fiduciary duty; Failure to identify and manage ethics
risks; and Conflicts of interest.

117. Which of the following would hinder an organizations code of conduct from functioning properly?

a.
b.
c.
d.
e.

118.

Lack of top management endorsing and supporting the code.

An effective internal control system
Empowering employees ethically to make ethical decisions
Having a Adue diligence defense@ for directors and officers
All of the above.

Why is an engagement letter so important to prepare prior to beginning new work?

a. It clearly defines expectations so that there are no surprises at the end of the job.
b. If the client requires specialized expertise, the CPA can advise the client of any outside
resources
he will utilize during the engagement.
c. It will lay out the billing guidelines (i.e., pay in advance, monthly retainer, etc.) so that there
are no
surprises after work has begun.
d. It allows the CPA to disclose any potential conflicts of interest so that the client is
aware of them from day 1.
e. All of the above.

1.
2.
3.
4.
5.

119. Which of the following are mechanisms for monitoring the compliance with corporate code of
conducts?
Employee surveys
Annual sign-offs by some or all employees
Reviews by legal department
Ethics audit or internal audit procedures
All of the above

120. The most important aspect of an ethics program designed to ensure an effective understanding and
commitment to one organizations ethical principles is the choice of program orientation. Which of the
following
is
not
a
commonly
know
orientation
type
for
this
purpose:

A.
B.
C.
D.
E.

Satisfaction
of
internal
Protect
top
management
Integrity
or
All of the above are commonly known orientation types for ethics program.
Posted 16th October 2012 by Jorge L. Verar, CFE

Compliance-based.
stakeholders.
from
blame.
Values-based.

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Chapter 4 Practical Ethical Decision Making

Chapter 4 Practical Ethical Decision Making

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Chapter 3 Ethical Behavior Philosophers Contributions

Chapter 3 Ethical Behavior Philosophers Contributions
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Chapter 1 Questions The Ethics Environment
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