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Business Ethics
Q:
Organizations can prevent the embarrassment and potential financial ruin caused by whistle-blowing by creating an internal system that gives whistle-blowers the option of being heard, thus resolving the issue in private.
Q:
Tracking the history of internal whistle-blowing is easier than tracking the history of external whistle-blowing.
Q:
The evidence of a company's misconducteven if supported by genuine, documented proofwill be rejected and the case dismissed if there is evidence that the whistle-blower was motivated by financial gain.
Q:
The abbreviation "qui tam" establishes a whistle-blower as a deputized petitioner for the government in cases that expose fraudulent behavior of companies.
Q:
Qui tam lawsuits are illegal under the False Claims Act.
Q:
A qui tam lawsuit is a lawsuit brought on behalf of the federal government by a whistle-blower under the False Claims Act of 1863.
Q:
The False Claims Act was amended in 1986 to make the penalization for whistle-blowers stiffer.
Q:
Under the federal Civil False Claims Act, whistle-blowers who expose fraudulent behavior against the government are entitled to a minimum of 75 percent of the amount recovered.
Q:
The federal Civil False Claims Act prevents whistle-blowers from implicating the government in any way.
Q:
Under the federal Civil False Claims Act, whistle-blowers are referred to as "relators."
Q:
An employee can never benefit from whistle-blowing in the corporate sector.
Q:
If there is evidence that the employee is carrying out an individual vendetta against the company, the legitimacy of his or her whistle-blowing should be questioned.
Q:
If there is evidence that the employee is motivated by the opportunity for financial gain, the legitimacy of his or her whistle-blowing should be questioned.
Q:
When a whistle-blower's immediate supervisor does not act, the employee should exhaust the company's internal procedures and chain of command to the board of directors.
Q:
Whistle-blowing is ethical in situations where the company, through a product or decision, will cause serious and considerable harm to the public.
Q:
Whistle-blowing is not considered ethical under any circumstances.
Q:
It is argued that the actions of whistle-blowers are not always motivated by their integrity, but by money or by their egos.
Q:
Whistle-blowers are often severely criticized since they have in some way breached the trust and loyalty they owe to their employers.
Q:
If an individual reports a companythat he or she is not employed byfor misconduct, the individual is called an external whistle-blower.
Q:
External whistle-blowing occurs when an employee brings the misconduct of the organizationthat he or she is employed byto the attention of law enforcement officials.
Q:
Internal whistle-blowing involves an employee bringing the organization's misconduct to the attention of his or her manager or supervisor and taking the complaint through appropriate channels within the organization.
Q:
Internal whistle-blowing occurs when an employee discovers corporate misconduct within his or her organization and brings it to the attention of law enforcement agencies and/or the media.
Q:
A whistle-blower is an individual who discovers corporate misconduct and chooses not to do anything about it.
Q:
If an employee's personal value system prompts him or her to speak up about the misconduct of the organization he or she works for, the employee takes on the role of a whistle-blower.
Q:
Discuss the Dodd-Frank Wall Street Reform and Consumer Protection Act and the agencies that were founded as a result of the passing of this act.
Q:
Discuss the importance of the Sarbanes-Oxley Act.
Q:
Discuss the Federal Sentencing Guidelines for Organizations.
Q:
Differentiate between bribes and grease payments.
Q:
How did the Foreign Corrupt Practices Act (FCPA) encompass all the secondary measures that were in use prior to the passing of the act?
Q:
The _____ states that there should be a key restriction in the legislation to limit propriety tradingthe ability of banks to trade on their own accounts.
Q:
The _____ is a government agency established to prevent banks from failing and otherwise threatening the stability of the U.S. economy.
Q:
The _____ is a government agency within the Federal Reserve that oversees financial products and services.
Q:
The _____ is a legislation that was promoted as the "fix" for the extreme mismanagement of risk in the financial sector that led to a global financial crisis in 2008-2010.
Q:
_____ of the Sarbanes-Oxley Act focuses on issues related to corporate tax returns.
Q:
_____ of the Sarbanes-Oxley Act focuses on issues related to auditor independence.
Q:
Under the Sarbanes-Oxley Act, any public accounting firms that audited the records of publicly traded companies were required to register with the _____.
Q:
The Public Company Accounting Oversight Board was established under the _____ Act.
Q:
The _____ was hailed as one of the most important pieces of legislation governing the behavior of accounting firms and financial markets since the Securities and Exchange Commission legislation in the 1930s.
Q:
Under the Federal Sentencing Guidelines for Organizations, the _____ is warranted where an organization was operating primarily for a criminal purpose.
Q:
Under the Federal Sentencing Guidelines for Organizations, the _____ is a fine that is set high enough to match all the assets of an organization and basically put the organization out of business.
Q:
Under the Federal Sentencing Guidelines for Organizations, the base fine multiplied by the _____ gives the total fine amount.
Q:
Under the Federal Sentencing Guidelines for Organizations, the _____ is calculated by multiplying the base fine up to 4 times.
Q:
_____ are facilitating payments to foreign officials in order to expedite or secure the performance of a routine governmental action.
Q:
_____ are payments of money or anything else of value to influence or induce any foreign official to act in a manner that would be in violation of his or her lawful duty.
Q:
The Foreign Corrupt Practices Act finds facilitation payments acceptable provided they expedite or secure the performance of a _____.
Q:
The Foreign Corrupt Practices Act was criticized because it formally recognized _____.
Q:
Prior to the passing of the Foreign Corrupt Practices Act, illegal corporate behavior was punishable only through "secondary" sources of legislation like the _____, which required full disclosure of funds that were taken out of or brought into the United States.
Q:
The introduction of the _____ placed more effective controls over bribing practices and less obvious forms of payment to foreign officials and politicians by American publicly traded companies pursuing international growth.
Q:
The illegal and unethical practice of providing old (or early) investors above-average returns on their investment with funds raised from new (or late) investors in the absence of any real business operation to generate profits is referred to as the _____.
A. Ponzi scheme
B. Jamaican switch
C. Pigeon drop
D. Tobashi scheme
Q:
The _____ states that there should be a key restriction in the legislation to limit the ability of banks to trade on their own accounts (termed proprietary trading).
A. Sarbanes-Oxley Act
B. Volcker rule
C. Campbell's rule
D. Bland-Allison Act
Q:
The _____ is a government agency established to prevent banks from failing and otherwise threatening the stability of the U.S. economy.
A. U.S. Congress Office of Compliance
B. Financial Stability Oversight Council
C. Consumer Financial Protection Bureau
D. Office of Financial Research
Q:
Which of the following responsibilities was granted to the Consumer Financial Protection Bureau (CFPB)?
A. Authority to act if a bank with more than $50 billion in assets poses a threat to the financial stability of the United States
B. Authority to limit the ability of banks to trade on their own accounts
C. Authority to examine and enforce regulations for banks and credit unions with assets over $10 billion
D. Authority to conduct studies regarding consolidation of accounting firms
Q:
The _____ is a government agency within the Federal Reserve that oversees financial products and services.
A. Consumer Financial Protection Bureau
B. Ministry of Internal Affairs
C. Department of Commerce
D. Public Company Accounting Oversight Board
Q:
The _____ refers to the legislation that was promoted as the "fix" for the extreme mismanagement of risk in the financial sector that led to a global financial crisis in 2008-2010.
A. Glass-Steagall Act
B. Sarbanes-Oxley Act
C. Dodd-Frank Wall Street Reform and Consumer Protection Act
D. Gramm-Leach-Bliley Financial Services Moderation Act
Q:
In September and October 2008, financial markets around the world suffered a severe crash as:
A. there was aggressive lending to subprime borrowers in a deregulated environment.
B. the Public Company Accounting Oversight Board (PCAOB) was disbanded, allowing auditors to work unregulated.
C. the assets of American overseas companies were seized by the Federal Sentencing Guidelines for Organizations.
D. all publicly traded firms only used the services of auditors affiliated with the Public Company Accounting Oversight Board.
Q:
Title IX of the Sarbanes-Oxley Act focuses on:
A. corporate social responsibility.
B. enhanced financial disclosures.
C. white-collar crime penalty enhancements.
D. corporate fraud and accountability.
Q:
Title VIII of the Sarbanes-Oxley Act addresses issues related to _____.
A. enhanced financial disclosures
B. commission resources and authority
C. the estimation of auditing fees
D. corporate and criminal fraud accountability
Q:
Which of the following is true of the Sarbanes-Oxley Act (SOX)?
A. It helped disband the Public Company Accounting Oversight Board.
B. It protects employees of companies who provide evidence of fraud.
C. It prohibits a CEO from signing the company's federal income tax return.
D. It considers whistle-blowing a white collar crime.
Q:
Which of the following statements is true of Title II of the Sarbanes-Oxley Act?
A. It allows public accounting firms to audit a company whose CEO was employed by that accounting firm within the past 12 months.
B. It encompasses the Public Company Accounting Oversight Board and allows publicly traded companies to be audited independently.
C. It requires senior auditors to rotate off an account every five years and junior auditors every seven years.
D. It permits auditors to keep written communications between management and themselves private.
Q:
The creation of the _____ was an attempt to reestablish the perceived independence of auditing companies after the corporate accounting scandals of the early 2000s.
A. Securities and Exchange Commission
B. Consumer Financial Protection Bureau
C. Federal Labor Relations Authority
D. Public Company Accounting Oversight Board
Q:
The _____ is a legislative response to the corporate accounting scandals of the early 2000s that cover the financial management of businesses.
A. Sarbanes-Oxley Act
B. Glass-Steagall Act
C. Bland-Allison Act
D. Taft-Harley Act
Q:
Which of the following is true of the effective compliance program prescribed by the Federal Sentencing Guidelines for Organizations?
A. A high-level official (such as a corporate ethics officer) must be in charge of and accountable for the compliance program.
B. Individuals should be granted excessive discretionary authority, as that would reduce the risk of criminal conduct.
C. Criminal offenses must generate an appropriate response, analysis, and corrective action, but not on the basis of suspicion.
D. An organization must be strict to address criminal misconduct in a consistent manner but should avoid penalizing employees for it.
Q:
Which of the following requirements is included in the status of organizational probation under the Federal Sentencing Guidelines for Organizations (FSGO)?
A. Reporting a business's financial condition to the court on a periodic basis
B. Reporting confidential details of all employees to the court on a periodic basis
C. Reporting progress to the FSGO in expediting or securing the performance of routine governmental favors
D. Reporting progress to the FSGO in making monetary contributions to the U.S. political parties
Q:
Under the Federal Sentencing Guidelines for Organizations, the death penalty:
A. can only be conferred upon multinational corporations and not on smaller businesses.
B. allows the state to appropriate half of the total assets of an organization.
C. is warranted where the organization was operating primarily for a criminal purpose.
D. cannot be levied upon organizations if it means putting them out of business.
Q:
The _____ is a fine that is set high enough by the Federal Sentencing Guidelines for Organizations to match all the assets of an organization and effectively puts the organization out of business.
A. prohibition payment
B. death penalty
C. facilitation payment
D. relative penalty
Q:
The maximum penalty that a judge can impose upon an organization for violating the Federal Sentencing Guidelines for Organizations is a penalty worth:
A. a tenth of the organization's assets.
B. a quarter of the organization's assets.
C. half of the organization's assets.
D. the full amount of the organization's assets.
Q:
The formula used to calculate the total fine sentenced by the Federal Sentencing Guidelines for Organizations (FSGO) is:
A. the base fine multiplied by the culpability score.
B. the base fine plus the culpability score.
C. the base fine minus the culpability score.
D. the base fine divided by the culpability score.
Q:
Which of the following statements is true of the culpability score?
A. It can be increased or decreased according to predetermined factors.
B. It is calculated before the base fine of an organization is determined by the Federal Sentencing Guidelines for Organizations.
C. It plays no role in calculating monetary fines under the Federal Sentencing Guidelines for Organizations.
D. It is a multiplier of the base fine of an organization with a maximum of 2.
Q:
Which of the following is true of the penalties under the Federal Sentencing Guidelines for Organizations (FSGO)?
A. They do not include monetary fines.
B. They include organizational probation.
C. They are not levied on small businesses.
D. They are levied only on foreign corporations.
Q:
Which of the following statements is true of the Federal Sentencing Guidelines for Organizations?
A. It holds organizations liable only for fraudulent activities in foreign markets.
B. It holds businesses liable for the criminal acts of their employees and agents.
C. It decreases the costs of unethical behavior.
D. It covers very few business crimes.
Q:
Which of the following is a difference between grease payments and bribes under the Foreign Corrupt Practices Act?
A. Unlike grease payments, bribes induce foreign officials to act in violation of their lawful duty.
B. Unlike grease payments, bribes include donations to bona fide charitable organizations.
C. Unlike grease payments, bribes are meant to secure a routine governmental action.
D. Unlike grease payments, bribes are used to facilitate processes approved of by law.
Q:
Under the Foreign Corrupt Practices Act, payments to foreign officials in order to expedite or secure the performance of a routine governmental action are known as _____.
A. grease payments
B. induced payments
C. implicit payments
D. accentuating payments
Q:
Under the Foreign Corrupt Practices Act, payments made with the knowledge that any portion of the payment is to be passed along to a foreign official for a prohibited purpose under the Foreign Corrupt Practices Act are known as _____.
A. grease payments
B. facilitation payments
C. bribes
D. costs
Q:
Which of the following is true of the penalties under the Foreign Corrupt Practices Act?
A. The Department of Justice can enforce criminal penalties of up to $20 million per violation for corporations and other business entities.
B. The Securities and Exchange Commission can impose a civil fine of up to $2,000 per violation upon corporations and other business entities.
C. Penalties under the books and record-keeping provisions can reach up to $25 million and 5 years' imprisonment for individuals and up to $50 million for organizations.
D. Officers, directors, stockholders, employees, and agents are subject to a fine of up to $250,000 per violation and imprisonment for up to five years.
Q:
Which of the following is a routine governmental action?
A. Allocating funds for companies to make facilitation payments overseas
B. Providing legal immunity for the employees of foreign companies
C. Providing police protection for the transit of goods across a country
D. Accepting payment from a foreign company in return for an exclusive contract
Q:
Which of the following is true of facilitation payments under the Foreign Corrupt Practices Act (FCPA)?
A. The FCPA recognizes them as bribes or an illegal form of payment.
B. The FCPA permits them if they secure exclusive contracts from foreign officials.
C. The FCPA finds them acceptable if they expedite a routine governmental action.
D. The FCPA finds them acceptable if they involve securing new businesses overseas.
Q:
Brendon Inc. required a permit to open its business in a foreign country. Although it had met all the requirements for the permit, the officials delayed providing Brendon Inc. with the permit. To expedite the process, the company made a payment to a high-ranking official who has the authority to grant the permit. Which of the following types of payment does this scenario exemplify?
A. Accentuation payment
B. Facilitation payment
C. Explicit payment
D. Implicit payment
Q:
Under the Foreign Corrupt Practices Act, payments that are acceptable (legal) provided they expedite or secure the performance of a routine governmental action are called _____.
A. facilitation payments
B. accentuation payments
C. alternative payments
D. implicit payments
Q:
Why was the Foreign Corrupt Practices Act criticized?
A. The act does not require full disclosure of funds that were taken out of or brought into the United States.
B. The act does not address the illegality of using the U.S. mail or wire communications to transact a fraudulent scheme.
C. The act requires corporations to fully disclose all transactions conducted with foreign officials in line with the SEC provisions.
D. The act formally recognizes the facilitation payments, which would otherwise be acknowledged as bribes.
Q:
Which of the following government agencies jointly enforce the Foreign Corrupt Practices Act?
A. The U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC)
B. The U.S. Congress Office of Compliance and the Federal Judicial Center
C. The U.S. National Economic Council (NEC) and the Government Accountability Office (GAO)
D. The U.S. Department of Commerce and the Office of Financial Research