Ethical Decision-Making: Corporate Gov, Acc & Fin (Chap 10)

( ), a staunch defender of free market economics, believes that markets can function only when certain conditions are met. 

• Milton Friedman

• Immanuel Kant

• John Locke

• John Stuart Mill

The function of auditors as gatekeepers is to verify a company's financial statements so that investors' decisions are free from ( ).

• mistakes

• fraud and deception

• omissions

• global financial crisis

A ( ) exists where a person holds a position of trust that requires that he exercise judgment on behalf of others, but where his personal interests conflict with those of others.

• duty of loyalty

• conflict of interest

• duty of care

• community of interest

A professional is said to have ( ) if he has a professional and ethical obligation to clients rooted in trust that overrides his personal interests.

• fiduciary duties

• executive rights

• creditor claims

• statutory duties

Executive compensation packages based on stock options create huge incentives to artificially inflate stock value.

• True

• False

Some might argue that protection against poor judgment is not possible in the business environment, but ( ) seeks instead to provide oversight in terms of direct lines of accountability and responsibility. 

• The European Union 4th Directive

• The European Union 7th Directive

• COSO framework

• Sarbanes-Oxley

The Sarbanes-Oxley does not really impose extraordinary financial costs on the firms; and the costs do not apparently higher than anticipated. 

• True

• False

COSO is a voluntary collaboration designed to improve financial reporting through a combination of controls and governance standards called the ( ). 

• Internal Control- Non-integrated Framework

• External Control- Non-integrated Framework

• Internal Control – Integrated Framework

• External Control- Integrated Framework

( ) describes “control” as encompassing “those elements of an organization that, taken together, support people in the achievement of the organization’s objectives.” 

• Public Accounting Reform and Investor Protection Act

• The Sarbanes Oxley Act

• The Market Approach

• COSO

There are how many control structures in business?

• 6

• 5

• 3

• 2