TEST BANK - BUSINESS ENVIRONMENT AND CONCEPTS
Table of contents
Corporate Rights, Responsibilities, and Authority
Types and Principles of Accounting Controls
Introduction to COSO and COSO ERM Models
Introduction to International Professional Practices Framework
Market Structure
Microeconomics
International Economics
Business Strategy and Market Analysis
Monetary Management
Monetary Valuation
Forecasts and Trends
Capital Budgeting
Financing Options
Long Term Financing
Working Capital Management
Ratio Analysis for Monetary Management
Data Systems and Communications
IT Risks and Controls
, TEST BANK - BUSINESS ENVIRONMENT AND CONCEPTS 1
Corporate Rights, Responsibilities, and Authority
1. Dan provided original data to authorities regarding a securities fraud in his
company. It led the SEC to impose penalties of $2 million. Which of the
subsequent is most likely to be Dan’s award under Dodd-Frank?
A. $50,000. B. $150,00 C. $350,00 D. $750,00
0. 0. 0
Solution: C
This amount is within the range of mandatory awards, between 10% and 30%
of sanctions imposed.
2. Mar have been complicit in her public company’s accounting fraud. She
consults a lawyer as the time comes to file her firm’s 10-K with the SEC. She
is a little uncomfortable with what she might have to do. The lawyer will
likely tell her that she will have to certify (and be potentially criminally liable
for lying about) these matters:
A. That she have reviewed the 10-K.
B. That to her knowledge the 10-K does not contain any materially untrue
statements.
C. That she, along with the CEO, is responsible for establishing and
maintaining her company’s internal controls.
D. All of the above.
Solution: D
All three of the previous decisions are examples, and not the only examples,
ofthings that Mar must certify when her firm files a 10-K.
3. Public company audit boards must contain which of the subsequent?
A. A majority of independent C. A monetary expert
directors D. A legal expert
B. An accounting expert
Solution: C
SOX requires that every audit board of a public company have at least one
“monetary expert” with (a) an understanding of GAAP and monetary
statements; (b) experience in preparing or auditing F/S; (c) experience with
internal auditing controls; and (d) an understanding of audit board functions.
4. A public company audit board’s “monetary expert” must have all of the
subsequent except:
A. An understanding of GAAP and monetary statements.
B. Experience in preparing or auditing monetary statements of comparable
companies and application of such principles in connection with
accounting for estimates, accruals, and reserves.
C. Experience with internal auditing controls.
D. Experience on a public company’s compensation board.
Solution: D
,5. Which of the subsequent did SOX NOT do to protect whistleblowers?
A. Require public company audit boards to install procedures to receive
whistleblowers’ complaints.
B. Provide a civil damages action for public company whistleblowers who
suffer retaliation for providing data regarding a violation of federal
securities laws.
C. Provide whistleblowers with the right to sue immediately in federal court.
D. Make it a crime punishable by a fine and/or imprisonment to retaliate
against an informant who provides truthful data relating to the
commission of any federal offense.
Solution: C
SOX did not do this. It was not until Dodd-Frank that whistleblowers were
accorded the right to bypass complaints to OSHA before filing suit in federal
district court.
6. Which of the subsequent is necessary to be an audit board monetary expert,
according to the criteria specified in the Sarbanes-Oxley Act of 2002?
A. A limited understanding of generally accepted auditing standards.
B. Education and experience as a certified monetary planner.
C. Experience with internal accounting controls.
D. Experience in the preparation of tax returns.
Solution: C
SOX, in Section 407, provides that, in defining the term “monetary expert”
(which the SEC have done in detail), the Commission shall consider whether a
person have through education and experience acquired: (1) an
understanding of GAAP and monetary statements; (2) experience in (a)
preparation of monetary statements and (b) application of such principles in
connection with the accounting for estimates, accruals, and reserves; (3)
experience with internal accounting controls; and (4) an understanding of
audit board functions.
7. Under SOX, it is a crime to punish a public company whistleblower who
provides truthful data relating to which of the subsequent:
A. Federal securities law C. Any federal offense.
violations. D. None of the above.
B. Federal tax law violations.
Solution: C
Whereas the SOX retaliation cause of action relates to whistleblowing about
federal securities law violations only, the SOX provision that makes it a crime
to retaliate against a whistleblower relates to whistleblowing regarding
commission of any federal offense.
, 8. Which of the subsequent did Dodd-Frank do regarding a whistleblower’s
rightto sue for retaliation accorded by SOX?
A. It extended the time to file a complaint with OSHA from 90 days to 180
days.
B. It extended the right to sue to whistleblowing employees of private
subsidiaries controlled by public companies.
C. It granted whistleblowers the right to a jury trial in retaliation cases that
are properly filed in federal court..
D. All of the above.
Solution: D
All of the first three decisions are correct.
9. Fang provided original data to authorities regarding a securities fraud in his
company. The data led to an imposition of penalties of $500,000. It also led to
Fang being fired in retaliation by his public company employer. Which of the
subsequent is true?
A. Fang must receive a bounty for his whistleblowing.
B. Fang may sue to seek compensation for the retaliation he suffered.
C. A and B.
D. None of the above.
Solution: B
Even if Fang’s tip had not led to any sanctions, Fang is still protected by the
anti-retaliation provision of Dodd-Frank.
Types and Principles of Accounting Controls
10. Which of the subsequent statements presents an example of a general control
for a computerized system?
A. Limiting entry of sales transactions to only valid credit customers.
B. Creating haveh totals from Social Security numbers for the weekly payroll.
C. Restricting entry of accounts payable transactions to only authorized
users.
D. Restricting access to the computer center by use of biometric devices.
Solution: D
Restricting access to the computer center is an example of a general control.
11. Which of the subsequent is an example of a detective control?
A. Use of pre-formatted screens for data entry.
B. Comparison of data entry totals to batch control totals.
C. Restricting access to the computer operations center to data-processing
staff only.
D. Employing a file librarian to maintain custody of the program and data
files.
Table of contents
Corporate Rights, Responsibilities, and Authority
Types and Principles of Accounting Controls
Introduction to COSO and COSO ERM Models
Introduction to International Professional Practices Framework
Market Structure
Microeconomics
International Economics
Business Strategy and Market Analysis
Monetary Management
Monetary Valuation
Forecasts and Trends
Capital Budgeting
Financing Options
Long Term Financing
Working Capital Management
Ratio Analysis for Monetary Management
Data Systems and Communications
IT Risks and Controls
, TEST BANK - BUSINESS ENVIRONMENT AND CONCEPTS 1
Corporate Rights, Responsibilities, and Authority
1. Dan provided original data to authorities regarding a securities fraud in his
company. It led the SEC to impose penalties of $2 million. Which of the
subsequent is most likely to be Dan’s award under Dodd-Frank?
A. $50,000. B. $150,00 C. $350,00 D. $750,00
0. 0. 0
Solution: C
This amount is within the range of mandatory awards, between 10% and 30%
of sanctions imposed.
2. Mar have been complicit in her public company’s accounting fraud. She
consults a lawyer as the time comes to file her firm’s 10-K with the SEC. She
is a little uncomfortable with what she might have to do. The lawyer will
likely tell her that she will have to certify (and be potentially criminally liable
for lying about) these matters:
A. That she have reviewed the 10-K.
B. That to her knowledge the 10-K does not contain any materially untrue
statements.
C. That she, along with the CEO, is responsible for establishing and
maintaining her company’s internal controls.
D. All of the above.
Solution: D
All three of the previous decisions are examples, and not the only examples,
ofthings that Mar must certify when her firm files a 10-K.
3. Public company audit boards must contain which of the subsequent?
A. A majority of independent C. A monetary expert
directors D. A legal expert
B. An accounting expert
Solution: C
SOX requires that every audit board of a public company have at least one
“monetary expert” with (a) an understanding of GAAP and monetary
statements; (b) experience in preparing or auditing F/S; (c) experience with
internal auditing controls; and (d) an understanding of audit board functions.
4. A public company audit board’s “monetary expert” must have all of the
subsequent except:
A. An understanding of GAAP and monetary statements.
B. Experience in preparing or auditing monetary statements of comparable
companies and application of such principles in connection with
accounting for estimates, accruals, and reserves.
C. Experience with internal auditing controls.
D. Experience on a public company’s compensation board.
Solution: D
,5. Which of the subsequent did SOX NOT do to protect whistleblowers?
A. Require public company audit boards to install procedures to receive
whistleblowers’ complaints.
B. Provide a civil damages action for public company whistleblowers who
suffer retaliation for providing data regarding a violation of federal
securities laws.
C. Provide whistleblowers with the right to sue immediately in federal court.
D. Make it a crime punishable by a fine and/or imprisonment to retaliate
against an informant who provides truthful data relating to the
commission of any federal offense.
Solution: C
SOX did not do this. It was not until Dodd-Frank that whistleblowers were
accorded the right to bypass complaints to OSHA before filing suit in federal
district court.
6. Which of the subsequent is necessary to be an audit board monetary expert,
according to the criteria specified in the Sarbanes-Oxley Act of 2002?
A. A limited understanding of generally accepted auditing standards.
B. Education and experience as a certified monetary planner.
C. Experience with internal accounting controls.
D. Experience in the preparation of tax returns.
Solution: C
SOX, in Section 407, provides that, in defining the term “monetary expert”
(which the SEC have done in detail), the Commission shall consider whether a
person have through education and experience acquired: (1) an
understanding of GAAP and monetary statements; (2) experience in (a)
preparation of monetary statements and (b) application of such principles in
connection with the accounting for estimates, accruals, and reserves; (3)
experience with internal accounting controls; and (4) an understanding of
audit board functions.
7. Under SOX, it is a crime to punish a public company whistleblower who
provides truthful data relating to which of the subsequent:
A. Federal securities law C. Any federal offense.
violations. D. None of the above.
B. Federal tax law violations.
Solution: C
Whereas the SOX retaliation cause of action relates to whistleblowing about
federal securities law violations only, the SOX provision that makes it a crime
to retaliate against a whistleblower relates to whistleblowing regarding
commission of any federal offense.
, 8. Which of the subsequent did Dodd-Frank do regarding a whistleblower’s
rightto sue for retaliation accorded by SOX?
A. It extended the time to file a complaint with OSHA from 90 days to 180
days.
B. It extended the right to sue to whistleblowing employees of private
subsidiaries controlled by public companies.
C. It granted whistleblowers the right to a jury trial in retaliation cases that
are properly filed in federal court..
D. All of the above.
Solution: D
All of the first three decisions are correct.
9. Fang provided original data to authorities regarding a securities fraud in his
company. The data led to an imposition of penalties of $500,000. It also led to
Fang being fired in retaliation by his public company employer. Which of the
subsequent is true?
A. Fang must receive a bounty for his whistleblowing.
B. Fang may sue to seek compensation for the retaliation he suffered.
C. A and B.
D. None of the above.
Solution: B
Even if Fang’s tip had not led to any sanctions, Fang is still protected by the
anti-retaliation provision of Dodd-Frank.
Types and Principles of Accounting Controls
10. Which of the subsequent statements presents an example of a general control
for a computerized system?
A. Limiting entry of sales transactions to only valid credit customers.
B. Creating haveh totals from Social Security numbers for the weekly payroll.
C. Restricting entry of accounts payable transactions to only authorized
users.
D. Restricting access to the computer center by use of biometric devices.
Solution: D
Restricting access to the computer center is an example of a general control.
11. Which of the subsequent is an example of a detective control?
A. Use of pre-formatted screens for data entry.
B. Comparison of data entry totals to batch control totals.
C. Restricting access to the computer operations center to data-processing
staff only.
D. Employing a file librarian to maintain custody of the program and data
files.
