Regulation and Ethics in Accounting 3.3.3

​Understanding accounting regulations is difficult because _____.

• ​regulations can be set by local, state, or federal government

• ​accounting regulations are purposely vague​

• ​all organizations use different accounting standards

• ​every industry has its own set of regulations

​What is the purpose of a financial audit?

• ​to define the accounting practices a company should follow

• ​to ensure that a company's accounting records are accurate

• ​to punish accountants for making mistakes

• ​to determine if a company is profitable or not

Which of the following did the Sarbanes-Oxley Act create?

• generally accepted accounting principles

• ​the Securities and Exchange Commission

• ​rules for how managers and auditors control and report company finances

• ​rules for appointing CFOs in public companies

What did WorldCom do to try to keep its stock price from falling?

• ​It forced employees to buy company stock.

• ​It created innovative energy trading methods to increase revenue.

• ​It took out loans but did not report them on the company's books.

• ​It falsified accounting entries to make the company appear profitable.

Enron and Tyco failed primarily because they _____.

• ​manipulated accounting procedures​​​

• ​did not follow GAAP​​

• ​did not provide reports to the SEC​

• ​obstructed justice​

​Susan is an accountant who always makes sure to keep up-to-date on changes in technology, best practices, and regulations. This practice demonstrates which core ethic of accounting?

• ​professional behavior

• ​professional competence

• ​integrity

• ​confidentiality

What can result from a failure to provide accurate financial statements to a bank?

• The bank may lose trust in the government.​

• ​The bank may fail due to poor planning.

• ​The bank may experience an increase in defaulted loans.​

• ​The bank may appear more attractive than it should.​

_____ can help protect clients' confidential information.

• Identity theft

• piracy

• licensing infringement

• anti-virus software

​The practice of _____ is harmful because it can reduce and divert revenues and also threaten the security of accounting systems.

• piracy

• a code of ethics

• firewalls

• competitive advantage

​In which situation would it be acceptable to disclose a client's confidential information without their permission?

• ​The client's trade association requests the information for a survey of its members.

• ​The Internal Revenue Service requests the information for an audit of the client's tax records.

• ​A close relative of the client requests the information because the client is behaving suspiciously

• ​The client has passed away and his or her will cannot be located.