FA 21 ACCT 4346 BUSINESS ETHICS FINAL
QUESTIONS WITH COMPLETE SOLUTIONS
.10 adverse interest threat Correct Answers the threat that a
member will not act with objectivity because the member's
interests are opposed to the client's interests
ex) client has expressed intention to commence litigation against
member, client participates in litigation against firm, asserts a
claim against firm for recovery of insurance payments made to
client, class action lawsuit is filed against client and firm
.11 advocacy threat Correct Answers threat that a member will
promote the client's interests or position to the point the
objectivity or independence is compromised
ex) member provides forensic accounting services to client in
litigation or a dispute with third parties, firm acts as an
investment advisor for client, firm underwrites or promotes a
client's shares, member endorses client's services or products,
firm acts as a registered agent for client
.12 familiarity threat Correct Answers threat that due to a long
or close relationship with a client, a member will become too
sympathetic to the client's interests or too accepting of their
work or product
ex) member's family or friend is employed by client, a former
employee joins the client in key position and has knowledge of
firms policies and practices for the professional services
engagement, senior personnel have a long association with
,client, member has a significant close business relationship with
client
.13 management participation threat Correct Answers threat that
a member will take on the role of client management or
otherwise assume management responsibilities, such may occur
during an engagement to provide nonattest services
.14 self interest threat Correct Answers threat that a member
could benefit financially or otherwise from an interest in or
relationship with a client
ex)member has financial interest in client, member's spouse
enters employment negotiations with client, firm enters into a
contingent fee arrangement for a tac refund claim that is not a
predetermined fee, excessive reliance exists on revenue from a
single client
.15 self review threat Correct Answers threat that a member will
not appropriate evaluate the results of a previous judgement
made or service performed or supervised by the member and
they will rely on that service in forming a judgment as part of
another service
ex)member relies on work product of member's firm, member
performs bookkeeping services for a client, partner in members
office was associated with client
.16 undue influence threat Correct Answers threat that a
member will subordinate his judgment to an individual
associated with a client due to that individual's reputation or
, expertise, personality, or attempts to coerce or exercise influence
over the member
ex)firm is threatened with a dismissal from client, client
indicates that it will stop business with firm if firm continues to
disagree with client on accounting or tax matter, client threatens
to withdraw or terminate a professional service unless member
reaches certain judgment or conclusions
2 dimensions of organizational culture Correct Answers 1.
concern for people: efforts to care for employee's well-being
2. concern for performance: efforts to focus on output and
productivity
4 categories of communication Correct Answers Interpersonal,
small group, nonverbal, listening
an effective ethics program Correct Answers ensures that all
employees understand and comply with ethical culture, act as
important deterrent to misconduct
antitrust activity Correct Answers meant to encourage fair
competition
-countries have differing levels of protections
-vertical system: channel member controls entire business
system (occurs when MNC's grow and create monopoly, reduces
competition, puts small competitors out of business)
apathetic Correct Answers minimal concern for people or
performance
QUESTIONS WITH COMPLETE SOLUTIONS
.10 adverse interest threat Correct Answers the threat that a
member will not act with objectivity because the member's
interests are opposed to the client's interests
ex) client has expressed intention to commence litigation against
member, client participates in litigation against firm, asserts a
claim against firm for recovery of insurance payments made to
client, class action lawsuit is filed against client and firm
.11 advocacy threat Correct Answers threat that a member will
promote the client's interests or position to the point the
objectivity or independence is compromised
ex) member provides forensic accounting services to client in
litigation or a dispute with third parties, firm acts as an
investment advisor for client, firm underwrites or promotes a
client's shares, member endorses client's services or products,
firm acts as a registered agent for client
.12 familiarity threat Correct Answers threat that due to a long
or close relationship with a client, a member will become too
sympathetic to the client's interests or too accepting of their
work or product
ex) member's family or friend is employed by client, a former
employee joins the client in key position and has knowledge of
firms policies and practices for the professional services
engagement, senior personnel have a long association with
,client, member has a significant close business relationship with
client
.13 management participation threat Correct Answers threat that
a member will take on the role of client management or
otherwise assume management responsibilities, such may occur
during an engagement to provide nonattest services
.14 self interest threat Correct Answers threat that a member
could benefit financially or otherwise from an interest in or
relationship with a client
ex)member has financial interest in client, member's spouse
enters employment negotiations with client, firm enters into a
contingent fee arrangement for a tac refund claim that is not a
predetermined fee, excessive reliance exists on revenue from a
single client
.15 self review threat Correct Answers threat that a member will
not appropriate evaluate the results of a previous judgement
made or service performed or supervised by the member and
they will rely on that service in forming a judgment as part of
another service
ex)member relies on work product of member's firm, member
performs bookkeeping services for a client, partner in members
office was associated with client
.16 undue influence threat Correct Answers threat that a
member will subordinate his judgment to an individual
associated with a client due to that individual's reputation or
, expertise, personality, or attempts to coerce or exercise influence
over the member
ex)firm is threatened with a dismissal from client, client
indicates that it will stop business with firm if firm continues to
disagree with client on accounting or tax matter, client threatens
to withdraw or terminate a professional service unless member
reaches certain judgment or conclusions
2 dimensions of organizational culture Correct Answers 1.
concern for people: efforts to care for employee's well-being
2. concern for performance: efforts to focus on output and
productivity
4 categories of communication Correct Answers Interpersonal,
small group, nonverbal, listening
an effective ethics program Correct Answers ensures that all
employees understand and comply with ethical culture, act as
important deterrent to misconduct
antitrust activity Correct Answers meant to encourage fair
competition
-countries have differing levels of protections
-vertical system: channel member controls entire business
system (occurs when MNC's grow and create monopoly, reduces
competition, puts small competitors out of business)
apathetic Correct Answers minimal concern for people or
performance
