02 Jan d. Control environment

Question 1 Which among the following elements of COSO comprises of policies and procedures that support the control environment?

Select one:

a. Ongoing monitoring

b. Information and communications

c. Control activities

d. Risk assessment

Question 2 Before the passage of governmental regulations regarding environmental issues, according to _____, only those individuals with proof of harm through pollution could raise legal challenges pollution.

Select one:

a. contractual law

b. market requirements

c. common consensus

d. tort law

Question 3 Advertising is a $200 billion a year industry in the United States alone. What does this prove?

Select one:

a. Business can influence the establishment of the law.

b. Environmental protection extends only as far as the law extends.

c. Business can influence consumer choice.

d. Economic growth is environmentally and ethically benign.

Question 4 When professionals have a professional and ethical obligation to their clients, duties that override their own personal interests, they are said to have

Select one:

a. responsibilities.

b. distribution rights.

c. creditor claims.

d. fiduciary duties.

Question 5 One aspect of the circular flow model does not differentiate natural resources from other factors of production. Thus it

Select one:

a. does not respect that resources can be sold.

b. means that resources are not infinite.

c. does not explain the origin of resources.

d. thus it means that households cannot own these resources.

Question 6 According to William Baxter, society, through the activities of individuals, will be willing to pay for an ‘optimal level of pollution’ as long as the _____ outweigh the final costs.

Select one:

a. initial expenses

b. ethical benefits

c. communal spirit

d. perceived benefits

Question 7 All of these functions can assume the roles of a gatekeeper except

Select one:

a. engineers.

b. auditors.

c. accountants.

d. financial analysts.

Question 8 Under the aegis of the Sarbanes-Oxley Act and COSO control environment, the internal audit and compliance professionals are also becoming more accountable for financial stewardship, resulting in all of the following except

Select one:

a. greater accountability.

b. greater transparency.

c. greater emphasis on effort to prevent misconduct.

d. greater loyalty.

Question 9 The three goals of sustainable development that include economic, environmental, and ethical sustainability are referred to as the

Select one:

a. Tripartite Goals.

b. three pillars of sustainability.

c. Three Pronged charter.

d. shoulder of sustainability.

Question 10 The events that led to Enron’s demise brought into focus the necessity of the _____ and the responsibility of auditors as never before.

Select one:

a. confluence of principles

b. integration of auditors

c. independence of auditors

d. autonomous governance

Question 11 Which among the following duties of board members underlines the fact that directors of a company need not actually be an expert or run the company?

Select one:

a. Duty of good faith

b. Duty of care

c. Duty of loyalty

d. Duty of guidance

Question 12 The approach that animals with a central nervous system feel pain is akin to the _____ ethical framework which asserts an ethical responsibility to minimize pain.

Select one:

a. social justice

b. virtue ethics

c. utilitarian

d. deontological

Question 13 Many analysts contend that the rampant corruption in financial institutions is evidence of a complete failure

Select one:

a. of the objective of the company.

b. of the social ethical structure.

c. of the venture capitalist industry.

d. in the corporate governance structure.

Question 14 The importance of the need for firms to be ahead of the sustainability curve is underlined by which among the following reasons for businesses to pursue the strategy of sustainability?

Select one:

a. Sustainability is a prudent long-term strategy.

b. Significant cost savings can be achieved through sustainable practices.

c. Competitive advantages exist for sustainable businesses.

d. Sustainability is a good risk management strategy.

Question 15 _____ argued against the exploitation of natural resources as if they could provide an inexhaustible supply of material.

Select one:

a. Conservationists

b. Naturalists

c. Animal rights activists

d. Biologists

Question 16 A survey has reported that more than half the firms believe that _____ gives investors and other stakeholders more confidence in their financial reports.

Select one:

a. Section 407

b. Section 307

c. Section 404

d. Section 201

Question 17 The second line in The Natural Step’s funnel represents

Select one:

a. resources necessary to sustain life.

b. resources that are biodegradable.

c. the biosphere limits.

d. aggregate worldwide demand.

Question 18 _____ explains the nature of economic transactions in the terms of a flow of resources from businesses to households and back again.

Select one:

a. Circular flow model

b. The three pillars of sustainability

c. Triple Bottom Line

d. Bilinear model

Question 19 A conflict of interest exists where a person holds a position of _____ that requires that she or he exercise judgment on behalf of others, but where her or his personal interests and/or obligations conflict with those of others.

Select one:

a. responsibility

b. expertise

c. trust

d. knowledge

Question 20 Changes within the accounting industry arising from the consolidation of major firms and _____ of services such as consulting within single firms have virtually institutionalized conflicts of interest.

Select one:

a. cross-selling

b. outsourcing

c. higher taxation

d. purchasing

Question 21 According to Daly, an economic system needs to be able to _____ not only the by-products of the production process, but also the products themselves.

Select one:

a. recycle or re-use

b. design

c. monitor

d. patent

Question 22 In order for the board to assess their success according to FSG standards, all of the following are necessities except

Select one:

a. the evaluation of their training and development materials.

b. the evaluation of their personal annual financial statements.

c. the evaluation of their individual evaluation processes.

d. the evaluation of their governance structure and position descriptions.

Question 23 The fact that future generations, neighbors, etc. will bear the brunt of environmental pollution, it goes to show that market failure can occur through means of

Select one:

a. lack of ability to create a price for important social goods.

b. the existence of externalities.

c. the distinction between individual decisions and group decisions.

d. the distinction between individual decisions and group consequences.

Question 24 Management assessment of internal controls is an aspect of which among the following provisions of the Sarbanes-Oxley Act that has significantly impacted corporate governance and boards?

Select one:

a. Section 404

b. Section 201

c. Section 407

d. Section 307

Question 25 From the perspective of _____, structural changes including the provision of legal protection or sanction to shield professionals from conflicts of interest would be an appropriate response to the accounting scandals of recent years.

Select one:

a. philosophical ethics

b. law

c. public opinion

d. social ethics

Question 26 Which among the following are responsible for ensuring that decisions and transactions conform to the law?

Select one:

a. Accountants

b. Attorneys

c. Auditors

d. Analysts

Question 27 The _____ sees environmental responsibilities as a fundamental part of basic business practice.

Select one:

a. adherence paradigm

b. Triple Bottom Line

c. ethical treatment of employees

d. sustainability paradigm

Question 28 The _____ relies on the judgment of accounting professionals in carrying out their duties rather than stipulating specific rules.

Select one:

a. American Accounting Association

b. AICPA Code of Professional Conduct

c. Securities and Exchange Commission

d. Institute of Internal Auditors

Question 29 Which among the following entails an incentive to redesign products so that they can be recycled efficiently and easily?

Select one:

a. Biomimicry

b. Service-based economy

c. Cradle-to-cradle responsibility

d. Ecoefficiency

Question 30 All of the following are characteristics of a market approach to environmental responsibilities except

Select one:

a. that a responsible business manager simply seeks profits.

b. that the market allocates resources efficiently.

c. the businesses develop a compliance structure ensuring conformation to certain regulations.

d. the business fills its role within a market system, thus serving greater overall good.

Question 31 Knowing what the future might be; creative businesses _____ the present and determine what must be done to arrive to that future.

Select one:

a. backcast to

b. chart

c. change

d. design

Question 32 The COSO standards for internal controls shifted audit, compliance, and governance from a _____ to concern for the organizational environment.

Select one:

a. numbers orientation

b. critical requirement orientation

c. stakeholder perspective

d. risk assessment mode

Question 33 According to Daly, the emphasis of economic growth as the goal of economic policy will inevitably fail unless it is realized that

Select one:

a. the population of the world needs to be controlled.

b. the economy is a subsystem within earth’s biosphere.

c. resources are infinite.

d. efficient markets need to be stabilized to ensure higher economic returns.

Question 34 According to the Federal Sentencing Guidelines, the board must, in particular, work with executives to analyze the

Select one:

a. mission statement of the organization.

b. objectives of the organizations.

c. long-term sustainable profits of the organization.

d. incentives for ethical behavior.

Question 35 Which among the following evaluate a company’s financial prospects or creditworthiness, so that banks and investors can make informed decisions?

Select one:

a. Accountants

b. Attorneys

c. Auditors

d. Analysts

Question 36 Estimates suggesting that with present technologies, businesses can readily achieve at least a fourfold increase in efficiency, and perhaps as much as a tenfold increase. This can be achieved through

Select one:

a. biomimicry.

b. ecoefficiency.

c. cradle-to-cradle responsibility.

d. service-based economy.

Question 37 The Triple Bottom Line approach involves the measurement of business success of sustainable businesses and sustainable economic development in terms of all of the following factors except

Select one:

a. economic sustainability.

b. legal sustainability.

c. ethical sustainability.

d. environmental sustainability.

Question 38 The interrelatedness of natural systems has helped mankind understand the wide range of dependence on ecosystems. This fact has increased the importance of

Select one:

a. understanding the moral nature of animals.

b. governmental regulations for ethical behavior.

c. self-interested reasoning.

d. innovation.

Question 39 Which among the following is responsible for influencing the control consciousness of its people under the elements of COSO?

Select one:

a. Ongoing monitoring

b. Information and communications

c. Risk assessment

d. Control environment

Question 40 The Enterprise Risk Management – Integrated Framework, expands on the prior framework in that it intentionally includes “_____” as one of its interrelated components.

Select one:

a. development and validation

b. risk assessment and reduction

c. research and analysis

d. objective setting