Rule UtilitarianismSelect the action that conforms to the correct moral rule that produces the greatest net benefitWho is associated with utilitarianism?Jeremy Bentham and John Stuart MillWhat are the problems with implementing utilitarianism?Can be difficult to assign values to harms and benefitsJustice- Emphasizes rights, fairness, and equality - Those with equal claims to justice should be treated equally; those with unequal claims should be treated unequallyWho is associated with justice?John RawlsWhat are the problems with implementing justice?Can be difficult to determine the criteria to distinguish equal from unequal claimsVirtue Ethics- Only method where ethical reasoning methods (virtues, internal traits of character) apply to both the decision maker and the decision - Judgements are made not by applying rules, but by possessing those traits that enable the decision maker to act for the good of othersWhich school of ethics is most closely associated with the Principles of the AICPA Code and the IMA Standards?Virtue ethicsWho is associated with virtue ethics?Ancient Greeks; Plato and AristotleWhat are the problems with implementing virtue ethics?Virtues may conflict; requiring choices to be madeWho said that "if the maxim or rule governing our action is not capable of being universalized, then it is unacceptable"?Immanuel KantIn which school of ethics can "the ends never justify the means"?DeontologyIn embodying Deontological Principles, who said "I disapprove of what you say, but I will defend to the death your right to say it"?Voltaire (Francois Marie Arouet)The founding fathers were influenced by which school of ethics when writing the Declaration of Independence?DeontologyWho described the natural life of mankind as "solitary, poor, nasty, brutish, and short"?Thomas HobbesWho argued that man's natural state is anti-social and that moral rules are created to avoid chaos, and that social authority come form the people?Thomas HobbesWhich philosopher warned against the tyranny of the majority?John Stuart MillWhich philosopher believed that all people are born equal, that education can free people from the subjugation of tyranny, and that the government has a moral obligation to guarantee that individuals always retained sovereignty over their own rights, including ownership of property that resulted from their own labor?John LockeWho said that "Every man has an immortal soul that is capable of eternal happiness or misery. Its happiness depends on his believing and doing the things that he needs to believe and do if he is to obtain God's favour - the things that are prescribed by God for that purpose"?John LockeWhich philosopher has an auto-icon displayed in the University College London?Jeremy BenthamWhich philosopher was John Stuart Mill strongly influenced by?Jeremy BenthamWhich Greek philosopher was Plato's student?AristotleWhich Greek philosopher was the tutor to Alexander the Great?AristotleWhich Greek philosopher prescribed a moral code of conduct for what he called "good living" and stressed individual virtues?AristotleWhat did Aristotle believe about jealousy and envy?He believed jealousy to be a good thing and envy to be a bad thing. "Jealousy is both reasonable and belongs to reasonable men, while envy is base and belongs to the base, for the one makes himself get good things by jealousy, while the other does not allow his neighbor to have them through envy."What is one of the major problems associated with John Rawls' theory of social justice?It removes incentive to work if all get equal benefits and society regressesWhich virtue is the basis for ethics in accountingIntegrityWhat is a major problem associated with situational ethics?It can be used to rationalize actions such as cheating and improper accounting methodsAn accountant who blows the whistle on financial wrongdoing by his/her employer by going outside the entity violates: a. One's reliability obligation b. The due care principle c. Confidentiality d. Public interest obligationc. ConfidentialityThe basic and fundamental beliefs that guide or motivate attitudes or actions are called: a. Values b. Egoism c. Morals d. Relativisma. ValuesThe best restatement of Kant's categorical imperative is: a. Do to others as you would have everyone do unto you b. That the ends justifies the means c. Consider others needs before you act d. That those with a smaller stake should have a smaller say compared to those with a bigger stakea. Do to others as you would have everyone do unto youEthical relativism can best be described as a: a. Concept that holds that integrity should be maintained in the face of pressure by others. b. Point of view that morality is relative to the norms of one's culture. c. An ethical reasoning method that holds one should always consider the effect of one's actions on others. d. An ethical reasoning method that holds one should always act out of self-interest.b. Point of view that morality is relative to the norms of one's culture.The Independence Principle in the AICPA Code applies toAll CPAs who render attestation servicesWhat is the common characteristic of Aristotle's virtues and ethical standards for CPAs? a. Integrity b. Due care c. Truthfulness d. Loyaltya. IntegrityTreating others fairly encompasses treating themEqually, impartially, and openlyThe biggest problem in implementing a rights approach to decision making isIt relies on moral absolutesWhich of the following is NOT a likely rationalization a student might use to justify cheating on an exam?Fair treatmentAristotle believed that __________ always preceded the choice of actionDeliberationObjectivity requires that a CPA shouldMaintain a mental attitude of intellectual honesty and impartialityDecisions that are made based on the underlying cultural factors can be best characterized byEthical relativismThe relationship between legal and ethical can best be expressed asEthical behavior requires us to do more than required by the law and less than the law allowsA CPA would violate the Due Care Principle if he/sheUndertook a professional engagement without having the requisite background, knowledge and experience.Which of following is false of active social networkers?They do not discuss company information online.The ancient Greeks thought of the virtues as characteristics of behavior thatCould lead to a good lifeUnder Bily v. Arthur Young, third-party users of audit reports are NOT allowed to sue accountants for...Professional negligenceUnder Bily v. Arthur Young, third-party users of audit reports are allowed to sue accountants for...Negligent misrepresentation and fraudWhat do third-party investors have to prove to sue accountants for negligent misrepresentation and fraud?That they actually relied upon it in making their decisionsCarpendale suggests that moral reasoning is viewed as a process of coordinating all perspectives involved in a moral dilemma. Moral reasoning takes place in which step of Rest's Model?Moral judgmentIn stage 5 of Kohlberg's model, ethical reasoning is motivated by a. Acting in the best interests of others b. Acting based on universal principles c. Upholding the rights, values, and legal contracts of society d. Following the lawc. Upholding the rights, values, and legal contracts of societyWhich of the following connect the integrated ethical decision-making process with Rest's framework? a. Take action and ethical judgment b. Identify the ethical and professional issues and ethical behavior c. Reflect on the moral intensity and virtues that enable action and ethical intent d. Identify and evaluate alternate courses of actions and ethical sensitivityc. Reflect on the moral intensity and virtues that enable action and ethical intentKohlberg's model can best be described asThe various phases in one's moral development and related levels of moral reasoningWhich of the following might NOT describe Heinz's thought process in deciding whether to steal the drug if he were at stage 6? a. Heinz should steal the medicine, because everyone has a right to live, regardless of the law. b. Heinz should not steal the medicine, because that violates the golden rule of honesty and respect. c. Heinz should steal the medicine, because saving a human life is a more fundamental value than the property rights of another person. d. Heinz should not steal the medicine, because the scientist has a right to fair compensation.d. Heinz should not steal the medicine, because the scientist has a right to fair compensation.In the "Heinz and the Drug" case described in the chapter, if Heinz was reasoning at stage 5 he might decide to steal the drug based on which of the following reasoning? a. Heinz should steal the medicine, because he will be much happier if he saves his wife, even if he will have to serve a prison sentence. b. Heinz should steal the medicine, because everyone has a right to live, regardless of the law. c. Heinz should steal the medicine, because the law prohibits exceptions. d. Heinz should steal the medicine, because his wife expects it.b. Heinz should steal the medicine, because everyone has a right to live, regardless of the law.A criticism of the Kohlberg model is that itMakes deontological ethics superior to other ethical perspectives.In stage 3 of Kohlberg's model, ethical reasoning is motivated by a. Satisfaction of one's needs b. Acting in the best interests of others c. Acting based on universal principles d. Upholding the rights, values, and legal contracts of societyb. Acting in the best interests of othersRest's "Four Component Model of Morality" can best be described as a. A model of moral judgment based on one's possession of certain virtues of behavior b. An approach to ethical decision making based on prescribed steps in making ethical decisions c. A model of the relationship between ethical action and one's level of moral development d. A model of moral development based on one's diversity perspectivec. A model of the relationship between ethical action and one's level of moral developmentRole expectation or approval from others is a motive for doing right in which stage of Kohlberg's moral reasoning? a. Fairness to others b. Social contract c. Law and order d. Obediencea. Fairness to othersJames Rest's model of ethical action involves four components inherent to the ethical decision-making process. Which of the following relates to a person's moral judgment of what ought to be done? a. Interpreting a situation as a moral dilemma b. Willingness to place ethical values ahead of non-ethical values c. Outcome of one's prescriptive reasoning d. Intention to act ethically aligning to his valuesc. Outcome of one's prescriptive reasoningIndividuals who reason at stage 6 of Kohlberg's model incorporate ethical reasoning based on: a. The morality of law and duty to the social order b. A rational calculation of benefits and harms to society c. Universal ethical principles d. All of the abovec. Universal ethical principlesIn the Pinto case, Ford relied on which approaches to ethical reasoning to decide on a course of action with respect to the faulty gas tank placement a. Justice and rights theory b. Egoism and utilitarianism c. Enlightened egoism and rights theory d. Ethical legalism and utilitarianismd. Ethical legalism and utilitarianismThe business judgment rule refers to a. Faithfulness to one's obligations and duties b. Acting with due care and good faith c. Honesty of purpose and caring d. Decision making under uncertaintyb. Acting with due care and good faithSection 302 of the Sarbanes-Oxley Act requires that management: a. Certify the financial statements b. Assess the company's internal controls c. Blow the whistle on corporate wrongdoing d. Disclose all executive compensationa. Certify the financial statementsThe level of care expected of a reasonable person under similar circumstances in meeting one's fiduciary duty is called: a. Duty of loyalty b. Duty of care c. Transparency d. Fairnessb. Duty of careSection 404 of the Sarbanes-Oxley Act requires a. A report of the company's internal control over financial reporting b. Code of ethics requirements for senior officers c. The principle executive to certify that they have reviewed the financial statements d. The establishment of procedures to accept employee complaintsa. A report of the company's internal control over financial reportingThe Clawback rule allows: a. protection for whistleblowers from retaliation b. compensation for whistleblowers c. recovering compensation from CEOs who engage in financial statement misconduct d. protections for CEOs who act in good faithc. recovering compensation from CEOs who engage in financial statement misconductThe ethical dissonance model looks at the ethical fit of the organizational and individual values. The optimal fit for an individual with high individual ethics would be: a. Low-Low b. High-Low c. Low-High d. High-Highd. High-HighProfessional skepticism can best be defined as having: a. An inquiring mind and suspension of belief b. An inquiring mind and deliberate decision making c. Deliberate decision making and suspension of belief d. Careful observation and virtue-based decision makinga. An inquiring mind and suspension of beliefEthics rules in the AICPA Code apply to: a. Individual CPAs who are licensed by state boards of accountancy, licensed accounting firms, and certain members of alternative practice structures b. Individual CPAs who are licensed by state boards of accountancy and accounting firms c. Licensed accounting firms and certain members of alternative practice structures d. Individual CPAs who are licensed by state boards of accountancy onlya. Individual CPAs who are licensed by state boards of accountancy, licensed accounting firms, and certain members of alternative practice structuresThe due care principle in the AICPA code: a. Addresses whether the independence standards have been met b. Addresses whether integrity and objectivity have been compromised c. Addresses the quality of the individual who performs professional services d. Addresses the quality of services performed by the CPAd. Addresses the quality of services performed by the CPAThe insider trading case against Thomas Flanagan focused on: a. Providing confidential information about audit clients to his business partner b. Personally trading in securities of audit clients after receiving confidential information c. Accepting a position with an audit client after receiving positive confidential information c. Providing confidential information about audit clients to a friendb. Personally trading in securities of audit clients after receiving confidential informationIn its investigation of ZZZZ Best, the House Subcommittee on Oversight and Investigations looked into: a. Why the board of directors failed to uncover the fraud at ZZZZ Best b. How the company was able to create 80% or more fictitious revenue c. How the company was able to create cookie jar reserves d. All of theseb. How the company was able to create 80% or more fictitious revenueWhich statement is correct with respect to a CPA's ethical obligation to return client books and records and CPA workpapers? a. Client-provided records in the custody or control of the CPA should be returned to the client at the client's request b. CPA work product never has to be turned over to the client c. CPA workpapers should be given to the client at the end of each audit d. Client-provided records should be destroyed after the audita. Client-provided records in the custody or control of the CPA should be returned to the client at the client's requestTo prevent subordination of judgment, a CPA should evaluate threats to: a. Objectivity and Integrity b. Integrity and Due care c. Independence and Scope of Services d. Independence and Due Carea. Objectivity and IntegrityCPAs can advertise and solicit clients as long as such practices are: a. Conducted in a professional manner b. Paid for by outside parties c. Informative about the CPA's services d. Not conducted in a misleading or deceptive mannerd. Not conducted in a misleading or deceptive mannerThe insider trading case against Scott London focused on: a. Personally buying stock of audit clients after receiving confidential information b. Providing confidential information about audit clients to a friend c. Personally selling stock of audit clients after receiving confidential information d. Providing confidential information about audit clients to his sonb. Providing confidential information about audit clients to a friendThe committee that was formed in 1985 to study and report on the factors that can lead to fraudulent financial reporting is the: a. Cohen committee b. Mintz and Morris committee c. House Subcommittee on Oversight and Investigations d. Treadway committeed. Treadway committeeImpairments of independence can occur when: a. A CPA owns a direct financial interest in a client b. A CPA owns a material indirect financial interest in a client c. Immediate family members of the CPA are in violation of the independence rules d. All of the aboved. All of the aboveOne of the differences between the ethical obligations of CPAs and lawyers is: a. Lawyers are obligated first and foremost to the client's interest while CPAs are obligated to the public interest b. Lawyers and CPAs must exercise objective judgment c. Lawyers are obligated first and foremost to the public interest while CPAs are obligated to their clients' interests d. Lawyers and CPAs both must be independent of their clientsa. Lawyers are obligated first and foremost to the client's interest while CPAs are obligated to the public interestProfessional skepticism links to professional judgment through the ethical standards of: a. Honesty, integrity, and due care b. Independent thought, objectivity, and intelligence c. Objectivity, intelligence, and reflective thought d. Independent thought, objectivity, and due cared. Independent thought, objectivity, and due careSection 201 of SOX provides that all of the following services may not be performed for attest clients except: a. Appraisal or valuation services b. Financial information systems design c. Internal audit outsourcing services d. Legal services related to the audit.d. Legal services related to the audit.The requirement that there should be reasonable support for a tax return position before a CPA recommends it to a client most directly aligns with which tax standard? a. The tax return should not be based on a frivolous position b. It is more likely than not that the tax position will be upheld if challenged c. There is a realistic possibility of success if the tax position is challenged d. Contingent fees cannot be accepted when providing tax services for an audit clientc. There is a realistic possibility of success if the tax position is challengedWhich rule of professional conduct in the AICPA Code does not apply both to internal and external accountants who are CPAs and members of the Institute? a. Due care b. Objectivity c. Integrity d. Independenced. IndependenceIn the PeopleSoft case, the auditors violated what aspect of independence? a. The auditor was exposed to an intimidation threat by the client b. The auditor was involved in a business relationship with the client c. The auditor borrowed money from the client d. The auditor served in a management decision making position with the clientb. The auditor was involved in a business relationship with the clientThe framework of COSO's Enterprise Risk Management can best be characterized as: a. Incorporate enhanced audit sampling procedures in substantive testing b. Incorporate enhanced corporate governance into internal control principles c. Incorporate enhanced audit sampling procedures in the testing of internal controls d. Incorporate enhanced internal control principles into enhanced corporate governanceb. Incorporate enhanced corporate governance into internal control principlesAll of the following are in a position to commit fraud except: a. Employees who have access to assets b. Top management who can override internal controls c. External auditors who audit the financial statements d. Internal auditors who test internal controlsc. External auditors who audit the financial statementsWhich of the following is an element of ERM? a. Audit risk assessment b. Control environment c. Reducing operational surprises and losses d. Aligning risk appetite and whether fraud has occurredc. Reducing operational surprises and lossesWhich of the following summarizes the essence of general responsibilities of GAAS? a. Quality of professionals that perform an audit b. The standards that guide auditors in issuing the audit report c. Criteria used to judge whether the audit has met quality requirements d. Whether the auditor obtained sufficient competent evidential matter to render an opiniona. Quality of professionals that perform an auditIn which of the following circumstances would a qualified opinion be appropriate? a. The auditor has been unable to obtain sufficient competent evidential matter b. The statements are not in conformity with generally accepted accounting principles regarding stock options plans and these misstatements have pervasive effect on the financial statements c. The statements are not in conformity with generally accepted accounting principles regarding stock options plans and these misstatements do not have pervasive effect on the financial statements d. The principal auditors decide to withdraw from the engagement due to distrust of managementc. The statements are not in conformity with generally accepted accounting principles regarding stock options plans and these misstatements do not have pervasive effect on the financial statementsConfidential client information can be disclosed outside the entity without violating the AICPA Code of Professional Conduct in each of the following situations except when: a. It is allowed for under the Dodd-Frank Financial Reform Act b. It protects the auditor's accounting for fraud and illegal acts c. It is reported to the SEC under Section 10A of the Securities Exchange Act d. It is to comply with the Private Securities Litigation Reform Actb. It protects the auditor's accounting for fraud and illegal actsSection 302 of the Sarbanes-Oxley Act requires: a. Auditor's assessment of management's report on internal controls b. Auditor's independent report c. Management's report on internal controls d. Management's certification of the financial statementsd. Management's certification of the financial statementsIn the ZZZZ best case, Barry Minkow was charged with: a. Insider trading on Lennar stock b. A fraudulent insurance restoration scam c. Stealing from a San Diego church d. Overcharging a LA housewife for carpet cleaning servicesb. A fraudulent insurance restoration scamThe Restatement (Second) of Torts Approach: a. Limits an accountant's legal liability to only those parties that have been named by the client b. Limits an accountant's legal liability to only those parties with which it has a privity relationship c. Expands an accountant's legal liability to all possible users of the audited financial statements d. Expands an accountant's legal liability to third parties identified by the client as intended recipients of workd. Expands an accountant's legal liability to third parties identified by the client as intended recipients of workWhich term refers to a person acting in a way that breaches their duty to another that causes harm? a. Intent b. Strict Liability c. Recklessness d. Negligenced. NegligenceThe Ultramares v. Touche case of 1933 held that a cause of action based on negligence could not be maintained by a third party who was not in contractual privity; however, it did leave open the possibility that: a. Third parties that were "foreseeable" may sue for ordinary negligence b. Third parties who used the financial statements may sue c. Third parties may sue if one of the parties in contractual privity allowed it to d. Third parties may sue in the case of fraud or constructive fraudd. Third parties may sue in the case of fraud or constructive fraudWhen an auditor acts so carelessly in the application of professional standards that it implies a reckless disregard for the standards of due care is referred to as: a. Scienter b. Negligence c. Fraud d. Constructive fraudd. Constructive fraudIn the U.S., if the auditor can demonstrate having performed services with the same degree of skill and judgment possessed by others in the profession, it can be said to have exercised: a. Scienter b. Nonfeasance c. Prudence d. Due Cared. Due CareIn Tenants Corp. v. Max Rothenberg, the auditors were held legally liable for: a. Write-up work b. Deficient tax work c. Ordinary negligence d. Gross negligencea. Write-up workA payment made to foreign government officials to ensure that they do what is expected given their job requirements can be characterized as a(n): a. Facilitating Payment b. Asset misappropriation c. Bribe d. Legal Paymenta. Facilitating PaymentThe accounting issue(s) in the Crazy Eddie case were: a. Inflating inventory and net income b. Capitalizing costs that should have been expensed c. Accelerating revenues into earlier periods d. Off-balance sheet entitiesa. Inflating inventory and net incomeWhen courts find accountants liable for constructive fraud, the implication is that: a. Auditors should be able to detect all deceit by management b. Accountants may be held liable even to third parties to whom they did not have a duty c. Auditors should always be liable when investors lose money due to deceit d. Accountants may be liable for fraud even when they had no knowledge of deceitd. Accountants may be liable for fraud even when they had no knowledge of deceitThe "particularity" provision in the PSLRA allows a plaintiff to: a. Assert privity b. Sue the auditor c. Assert scienter d. Sue managementc. Assert scienterWhich of the following is NOT one of the four stages in an audit-related dispute? a. Auditors legal liability leads to financial settlement b. Losses are linked to material misstatements of financial statements c. Events arise that create losses for the users of the financial statements d. Legal process resolves the disputea. Auditors legal liability leads to financial settlementThe legal precedent that evolves from legal opinions issued by judges in deciding a case and guides judges in deciding similar cases in the future is referred to as: a. Common law b. Business law c. Tort law d. Statutory lawa. Common lawIn what situation can an individual be held liable for harm no what their mental state was? a. Recklessness b. Negligence c. Strict Liability d. Intentc. Strict LiabilityThe Private Securities Litigation Reform Act of 1995 applies the practice of _______ to auditor liability determinations. a. Joint and several liability b. Risk assessment c. Particularized standard d. Proportionate liabilityd. Proportionate liabilityHow does the Ultramares Doctrine help accountants?Limits their liability for negligenceWhich case required auditors to have an engagement letter?1136 Tenants CorpModified Ultramares DoctrineSome states (including Texas) have this which says that if the accountants have knowledge that the investors/buyers are relying on the audit report than they can be sued (even if it was not set forth in the engagement letter b/c an implied contract)T/F Malpractice insurance covers fraud for accountants?FalseQuasi-judicial ImmunityCertain officials are immune of performing judicial type functions but not when performing other functions connected with their office.Conviction for violating the FCPA does not have to prove that a ________ occured.BribeWhich industries are frequent FCPA targets?Medical, defense, and oilWhich account was misused in the HealthSouth case?Contractual allowanceT/F Contingent fees are prohibited for tax returnsTrueWhat is the most appropriate action for a conflict of interest for two clientsDisclose the conflict of interest to both client, receive written acknowledgements, and keep the documents for 3 yearsWhat significance did the McKesson Robins case have for accountants?Required audit committees and approval for auditors by shareholders

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