MAN4701 Exam 2 Study Guide | Audits,
Corporate Governance & Ethics|Questions
Verified Provided with A+ Graded Rationales
Latest Updated 2026
Which type of audit is perceived as objective and reliable?
external audit
External Audit
An evaluation conducted by one organization, such as a CPA firm, on another.
Supply Chain Transparency
what happens in a company's supply chain is fully disclosed to stakeholders - as if seen
through a clear glass window. Some firms have realized that openly revealing supply chain
information can enhance brand loyalty
Internal Audits
The company hires and trains its own staff of auditors, who inspect factories to determine
compliance
- advantage: company controls the process
- disadvantage: potential bias
Crowd-sourced Audits
Gathers information about factory conditions directly from workers using their mobile phones
when they are away from work
Why does Private Regulation occur?
1. home country governments lack jurisdiction
2. developing countries have weak regulatory capacity
3. transnational institutions have limited enforcement power
Trends in Supply chain auditing
1. Shared Audits
2. Root Cause Analysis
Root Cause Analysis
, A method to determine why repeated violations occur, such as identifying systemic wage
payment issues in garment factories
Shareholders
include individual people and institutional investors (pension funds, mutual funds) who own
company stock
Shareholder Entitlement
Legal rights including receiving dividends if declared, voting on directors, and bringing
lawsuits
Corporate Reputation Building Process
1. Offer significantly better products/services than competitors
2. Create a consistent, compelling identity story
3. Grab attention of media and opinion leaders
Argument FOR High Executive Compensation
1. Aligns manager interests with shareholders - 69% of pay is performance-based
2. U.S. CEOs manage larger companies than foreign peers
Argument AGAINST High Executive Compensation
1. May incentivize unethical behavior to boost stock prices
2. U.S. CEOs earn 300x worker pay vs. 20x in Germany
Whistle-blowing Protections
1. Sarbanes-Oxley: illegal to retaliate
2. Dodd-Frank: Financial rewards
Justification Criteria for Whistleblowing/Organizational Misconduct
1. Serious harm occuring
2. Internal resolution attempted
3. Harm justifies personal costs
Rule of Board Committees
1. Nominating Committee: develops list of board candidates with CEO input
2. Audit Committee: oversees financial reporting integrity
Criteria for Public Whistleblowing
Corporate Governance & Ethics|Questions
Verified Provided with A+ Graded Rationales
Latest Updated 2026
Which type of audit is perceived as objective and reliable?
external audit
External Audit
An evaluation conducted by one organization, such as a CPA firm, on another.
Supply Chain Transparency
what happens in a company's supply chain is fully disclosed to stakeholders - as if seen
through a clear glass window. Some firms have realized that openly revealing supply chain
information can enhance brand loyalty
Internal Audits
The company hires and trains its own staff of auditors, who inspect factories to determine
compliance
- advantage: company controls the process
- disadvantage: potential bias
Crowd-sourced Audits
Gathers information about factory conditions directly from workers using their mobile phones
when they are away from work
Why does Private Regulation occur?
1. home country governments lack jurisdiction
2. developing countries have weak regulatory capacity
3. transnational institutions have limited enforcement power
Trends in Supply chain auditing
1. Shared Audits
2. Root Cause Analysis
Root Cause Analysis
, A method to determine why repeated violations occur, such as identifying systemic wage
payment issues in garment factories
Shareholders
include individual people and institutional investors (pension funds, mutual funds) who own
company stock
Shareholder Entitlement
Legal rights including receiving dividends if declared, voting on directors, and bringing
lawsuits
Corporate Reputation Building Process
1. Offer significantly better products/services than competitors
2. Create a consistent, compelling identity story
3. Grab attention of media and opinion leaders
Argument FOR High Executive Compensation
1. Aligns manager interests with shareholders - 69% of pay is performance-based
2. U.S. CEOs manage larger companies than foreign peers
Argument AGAINST High Executive Compensation
1. May incentivize unethical behavior to boost stock prices
2. U.S. CEOs earn 300x worker pay vs. 20x in Germany
Whistle-blowing Protections
1. Sarbanes-Oxley: illegal to retaliate
2. Dodd-Frank: Financial rewards
Justification Criteria for Whistleblowing/Organizational Misconduct
1. Serious harm occuring
2. Internal resolution attempted
3. Harm justifies personal costs
Rule of Board Committees
1. Nominating Committee: develops list of board candidates with CEO input
2. Audit Committee: oversees financial reporting integrity
Criteria for Public Whistleblowing
