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 person’s 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 company’s overall business strategy

b. selecting and compensating the listed company’s senior executives
c. evaluating the listed company’s outside auditor
d. overseeing the preparation of the listed company’s 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 of the above

Answer: e. All 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. Regulator’s 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 company’s overall business strategy

b. Evaluating the company’s 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
director’s 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
corporation’s 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 company’s 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 Maslow’s 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. Legally to shareholders
b. Legally to all stakeholders
c. Strategically to additional stakeholders
d. (a) and (b)
e. (a) and (c)
 Answer: c. Strategically to additional stakeholders

33.The company’s internal auditors and the Ethics Officer should report:
a. Day-to-day to the CEO
b. Day-to-day to the Audit Committee of the Board of Directors
c. Regularly to the Audit Committee of the Board of Directors without management being
present
d. (a) and (c)
e. (a) and (b)

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. Tone at the top

b. Ethics officer and internal auditors
c. A comprehensive ethical culture
d. Principles, rules and examples
e. All of the above

Answer: e. All of the above

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

a. Normal definitions of risk are too narrow for stakeholder accountability

b. Assign responsibility, develop follow-up processes and board review
c. Discovery and remediation are essential
d. The code of ethics must be reviewed by independent parties
e. An ethics risk exists when expectations of stakeholders may not be met

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. D has to exercise judgement in P’s behalf
b. P has to exercise judgement in D’s behalf
c. D has a special interest that interferes with proper judgement
d. (a) and (b)
e. (a) and (c)

Answer: e. (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. P has a special interest that interferes with proper judgement

b. D may have to exercise judgement in P’s behalf
c. D has a special interest that interferes with proper judgement
d. (a) and (b)
e. (b) and (c)

Answer :b. D may have to exercise judgement in P’s behalf

39. This is the preferred approach to deal with conflicts of interests

a. Management
b. Disclosure
c. Remediation
d. Avoidance
e. Awareness

Answer: d. Avoidance

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

a. Shareholders’ and stakeholders’ goals

b. Manager’s and stakeholders’ goals
c. Shareholders’ and managers’ goals
d. Principal’s and shareholders’ goals
e. Agent’s and stakeholders’ goals

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. 20%
b. 60%
c. 80%
d. 100%
e. 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. High intelligence
b. Greed
c. Need for whatever is taken
d. Opportunity to take advantage
e. Low probability of being caught

Answer: c. Need for whatever is taken

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

a. Preventing, detecting and punishing violations of the law

b. Define organizational values and encourage employee commitment
c. Improve image and relationship with stakeholders
d. Protect management from blame
e. All of the above

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

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

a. Preventing, detecting and punishing violations of the law

b. Define organizational values and encourage employee commitment
c. Improve image and relationship with stakeholders
d. Protect management from blame
e. All of the above

Answer: b. Define organizational values and encourage employee commitment

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

a. Compliance-based
b. Value-based
c. Achievement oriented
d. Stakeholder-based
e. Externally oriented
Answer: b: Value

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

a. Ethical awareness
b. Ethical awakening
c. Ethical renewal
d. Ethical wave
e. None of the above

Answer:

47. A Conference Board survey identified the following rationale for developing codes of ethics:

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

b. Provide a statement of do’s and don’ts
c. Discuss what is expected in stakeholder relationships
d. Establish values and mission
e. All of the above

Answer: e. All of the above

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

a. Credo
b. Code of ethics
c. Code of conduct
d. Code of practice
e. All of the above
Answer:

49. Which of the following is not a mechanism for monitoring a code of ethics?

a. Ethics audit or internal audit procedures

b. Reviews by legal department
c. Awards and bonuses
d. Annual sign-off by employees
e. Employee surveys

50. Which of the following is not an example of emerging public accountability standards or
initiatives?

a. SOX-404
b. GRI
c. AA-1000
d. FTSE4Good
e. All of the above

Answer: a. SOX-404

51. SOX imposed the following new penalties for executives:

a. Fines
b. Suspension
c. Criminal prosecution for executives
d. Return of ill-gotten gains
e. All of the above

Answer: e. All of the above

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

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

b. Extensive training, primarily intellectual skills, and representation by professional
organizations
c. Extensive training, provision of important services to society, and primarily intellectual skills
d. License or certification, representation by professional organizations, and autonomy
e. 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. Honesty
b. Integrity
c. Objectivity
d. A primary commitment to self-interest
e. 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. Development and maintenance of required knowledge and skills

b. Maintenance of trust
c. Maintenance of an acceptable personal reputation
d. All of the above
e. (a) and (b) only

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

55. Professional Accountants, in their fiduciary role, owe primary loyalty to:

a. The accounting profession

b. The client
c. The general public
d. Government regulations
e. 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. Pre-conventional
b. Conventional
c. Post-conventional
d. Autonomous
e. 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. Conventional
c. Post-conventional
d. Autonomous
e. Principled

Answer: b. Conventional

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

a. Act in the client’s best interest

b. Objectivity and independence
c. Maintain the good reputation of the profession
d. Maintain confidentiality
e. Not to be associated with misleading information

Answer: a. Act in the client’s 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. Objectivity
b. Professional due care
c. Integrity
d. Confidentiality
e. 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. Integrity
b. Objectivity
c. Professional due care
d. Confidentiality
e. 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 A’s 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. Publish a statement of management responsibility

b. Auditor to report annually to audit committee
c. Expand audit report to clarify auditor's role and the level of assurance
d. (a) and (b)
e. (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. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or
regulation
b. Safeguards reducing the risk of conflict of interest between an auditor and management
c. Safeguards reducing the risk of conflict of interest within a professional accounting firm’s
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. Safeguards reducing the risk of conflict of interest created by the profession, legislation, or
regulation
b. Safeguards reducing the risk of conflict of interest within a client
c. Safeguards reducing the risk of conflict of interest within a professional accounting firm
d. All of the above
e. (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 firm’s quality control system is an example of:

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

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

accountants:
a. International Accounting Standards Board
b. European Federation of Accountants
c. Financial Accounting Standards Board
d. Public Accounting Oversight Board
e. International Federation of Accountants

Answer: e. 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. CPAB
b. PCAOB
c. SEC
d. FASB
e. AICPA

Answer: b PCAOB

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

a. AICPA
b. FASB
c. SEC
d. PCAOB
e. All of the above

Answer: a. AICPA

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

a. Self-review
b. Intimidation
c. Advocacy
d. Familiarity
e. 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. Self-review
b. Intimidation
c. Advocacy
d. Familiarity
e. None of the above

Answer: d

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

a. Self-review
b. Intimidation
c. Advocacy
d. Familiarity
e. None of the above

Answer: b. Intimidation

72. Which of the following is not a dimension of the COSO Enterprise Risk Framework?

a. Strategic
b. Monitoring
c. Operations
d. Reporting
e. Compliance

73. Which of the following is not a component of the COSO Enterprise Risk Framework?

a. Risk assessment
b. Risk review
c. Internal environment
d. Information and communication
e. Control activities.

Answer: b. Risk review

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

a. Control environment
b. Risk assessment
c. Information and communication
d. Monitoring
e. Control activities

Answer: a. Control environment

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

a. Environmental
b. Informational
c. Financial
d. Operational
e. All of the above

Answer: e. All of 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. Economic, environmental and organizational

b. Environmental, financial and social
c. Economic, organizational and social
d. Environmental, financial and organizational
e. Cultural, environmental and social

Answer: a. Economic, environmental and organizational : NOT sure .. GRI web indicate
three categories: (G3.1’s 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. Labor practices
b. Human rights
c. Product responsibility
d. Society
e. Costumer rights

Answer: b. Human rights ???

80. Auditors are mandated to assess the client’s risk of financial reporting fraud. Auditing
standard SAS-99 considers the following a mandatory tool in fraud assessment:

a. Discussion and brainstorming

b. Fraud triangle
c. Interviews with management
d. Development of fraud training programs
e. All of the above

Answer: e. All of the above

81. Which of the following would be the least useful report of ethics risks and opportunities?

a. By hypernorm value
b. By shareholder group
c. By product or service
d. By corporate objective
e. 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 son’s medical bills. Using the fraud triangle, this situation
likely constitutes:

a. Motive
b. Rationalization
c. Opportunity
d. (a) and (b)
e. (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 son’s hospital bills. Using the fraud triangle, this situation likely constitutes:

a. Motive
b. Rationalization
c. Opportunity
d. (a) and (b)
e. (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. Motive
b. Rationalization
c. Opportunity
d. (a) and (b)
e. (a) and (c)

Answer: d. (a) 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 day’s 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. Everyone else is doing it

b. Denial of the victim
c. Condemnation of the condemners
d. Appeal to higher loyalties
e. 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 company’s suppliers. This type of rationalization is based on:

a. Denial of responsibility
b. Denial of the victim
c. Condemnation of the condemners
d. Everyone else is doing it
e. 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. Denial of responsibility
b. Denial of the victim
c. Everyone else is doing it
d. Appeal to higher loyalties
e. Entitlement

Answer: c. Everyone else is doing it

89. The following need is at the top of Maslow’s Hierarchy of Needs:

a. Esteem
b. Respect
c. Fulfillment
d. Safety
e. Affinity

Answer : d. Safety (Psychological, Safety, Love/Belonging, Esteem and Self

Actualization)

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

a. Unanticipated crises are easier to control than anticipated crises

b. Unanticipated crises have a less negative reputational impact than anticipated crises
c. Anticipated crises start much earlier than unanticipated crises
d. Anticipated crises are less costly than unanticipated crises
e. 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. Pre-crisis
b. Reputation restoration
c. Controlled
d. Uncontrolled
e. Post-crisis

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

A. Lack of top management endorsing and supporting the code.

B. An effective internal control system
C. Empowering employees ethically to make ethical decisions
D. Having a “due diligence defense” for directors and officers
E. 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. G-Greed
B. O-Opportunity to take advantage
C. N-Need for whatever is taken
D. E-Expectation of being caught is low
E. 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. Competence in performing services.

b. Objectivity in the offering of services.
c. Integrity in client dealings.
d. All of the above.
e. 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. Which of the following are considered reportable events under the Texas Public
Accountancy Act?
a. The cancellation, revocation or suspension of a driver’s license related to a Driving While
Intoxicated related offense
b. A felony
c. A crime of moral turpitude
d. B&C
e. 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. - 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. Attention Deficit Disorder or A.D.D.

b. Obsessive Compulsive Disorder or O.C.D.
c. Independence of mind or I.O.M.
d. Post-traumatic Stress Disorder or P.T.S.D.
e. 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. The personal moral values of the Board of Directors involved.

b. The personal ethical values of the professional accountant involved.
c. The importance of the values added
d. 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. Perceived fairness, fair treatment of employees.

114. 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. Lack of top management endorsing and supporting the code.

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

118. 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.

119. Which of the following are mechanisms for monitoring the compliance with corporate
code of conducts?

A. Employee surveys
B. Annual sign-offs by some or all employees
C. Reviews by legal department
D. Ethics audit or internal audit procedures
E. All of the above

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

A. Compliance-based.
B. Satisfaction of internal stakeholders.
C. Protect top management from blame.
D. Integrity or Values-based.
E. All of the above are commonly known orientation types for ethics program.