Need Help To Resolve Solution to each question:

11. Betty Vinson at WorldCom is a good example of a good person getting caught up in being a part of committing financial statement fraud. Betty needed her job at WorldCom to support her family. If Betty Vinson had taken this course, what might have helped her to act ethically and to not have been a part of the fraud at WorldCom?

Knowing that SOX provided her protection from losing her job if she became a whistleblower and told the appropriate authorities what she was being told to do

Knowing that Dodd-Frank provided financial incentives that would offset her loss of income if she lost her job because she became a whistleblower and told the appropriate authorities what she was being told to do

Knowing that the strong corporate governance at WorldCom, as evidenced by the independent audit committee of the board of directors, would protect her from losing her job

Listening to W. Clement Stones admonishment to, Have the courage to say no. Do the right thing because it is right.

All of the above

12. WorldComs fraud included a rather simple technique that should have been caught and reported on by the auditors. That technique was

Failure to disclose Special Purpose Entities (SPEs) on its balance sheet

Recording expenses as assets

Recording liabilities as shareholders equity

Recording excess reserves

Not recording compensation paid to corporate officers

13. The change in Arthur Andersen from the early 1970s to the firm that was forced out of business in the 2000s can be attributed to

A change in the tone at the top of the organization

A change in the partner profit sharing structure

A change in the AICPA Code of Professional Conduct

The enactment of the Sarbanes-Oxley Act

The creation of the PCAOB

e following is not an example of occupational fraud?

Hourly employees claiming overtime pay when in fact they did not work overtime

Taking office supplies home the night before the first day of the school year for your kids because you were too busy at work to go buy school supplies for your kids

Using a company credit card to pay for personal travel expense while on a business trip

Misstating net operating income at the direction of the CFO to enable the company to meet earnings targets

All of the above represents occupational fraud

15. Which of the following is a true statement about Sarbanes Oxley (SOX) legislation?

SOX has proven to be a deterrent to financial fraud

SOX has proven to be a deterrent to occupational fraud

SOX has not stopped corporate fraud, significant corporate fraud has persisted even since SOX became effective

SOX has been effective in strengthening internal controls in privately held companies

SOX is applicable to all companies in the United States

16. Section 806 of SOX provides for

Protection from discharge or demotion for employees of publicly traded companies who provide information on suspected fraud to the employees supervisor or to the SEC

Protection from discharge or demotion for employees of all companies in the United States who provide information on suspected fraud to the employees supervisor or to the SEC

Protection from discharge or demotion and a financial incentive of up to 30% of any recovery of over $1 million for employees of publicly traded companies who provide information on suspected fraud in a federal or regulatory investigation to the SEC

Does not provide for protection from discharge or demotion but offsets that financial loss of a demotion or loss of job by providing for a financial incentive of up to 30% of any recovery of over $1 million for employees of publicly traded companies who provide information on suspected fraud in a federal or regulatory investigation to the SEC

None of the above

17. Professional skepticism

Is the same as professional judgment

Is described as auditors approaching matters objectively and independently, with inquiring and incisive minds

Is not required by auditing standards

Is not required in performing an audit

Is a deterrent to developing good client relationships

18. After the frauds of the early 1980s, the Treadway Commission was formed which established

The FCPA

COSO

SOX

The PCAOB

The AICPA Code of Professional Conduct (the Code)

19. The AICPA Code identifies threats to independence for a CPA performing attest services to include

Independence in fact only

Independence in appearance only

Independence in both fact and in appearance

Independence in either fact or in appearance, but not both

None of the above

20. The AICPA Code consists of three parts. What are those parts?

Members providing attest services, members providing tax services, other members

Members in CPA firms, members in corporations, other members

Members practicing accounting, members not practicing accounting, academic members

Members in the Big 4 CPA firms, members in other CPA firms, all other members

Members in public practice, members in business, and other members

21. What does Section 2.200 in the AICPA Code cover?

Independence standards for members in public practice

Independence standards for members in business

Independence standards for other members

Independence standards for members providing tax services

There is no Section 2.200 in the AICPA Code

22.

Audits of financial statements used in an IPO, based on the IPO value of the shares of stock

A compilation of a financial statement when the CPA expects that a third party will use the financial statement and the compilation report does not disclose a lack of independence

An examination of prospective financial information

Filing an amended state or federal tax return claiming a tax refund based on a tax issue that is the subject of a tax case involving a different taxpayer

Contingent fees are allowed for all of the above services

23. What impact does a violation of the AICPA Code have on a CPAs license to practice as a CPA?

The AICPA may revoke a members right to practice before the SEC if the member violates the AICPA Code

The AICPA may revoke a CPAs license to practice public accounting if the member violates the AICPA Code

The various State Societies of CPAs have adopted the AICPA Code or regulations very close to the AICPA Code as part of their regulations and may revoke a CPAs license to practice public accounting if the member violates the State Societys regulations

The various State Boards of Accountancy have adopted the AICPA Code or regulations very close to the AICPA Code as part of their regulations and may revoke a CPAs license to practice public accounting if the member violates the State Boards regulations

All of the above

24. When my business partner and I bought a CPA firm several years ago, the CPA we purchased it from told us, You must resist taking all work that walks in the door. To make the money you need to stay in business, you will be tempted to take on accounting work where you do not have the experience to do the work. You should not do this. You should only accept work where you have sufficient experience to do a professional job. Does this advice follow any provisions in the AICPA Code?

No, as long as we can research the areas we may not be fully experienced in, we are allowed to take on any work a CPA is allowed to perform

No, as CPAs we are considered to be competent in any area that a CPA has training

No, to tell me I cannot perform services that another CPA can perform would be an illegal constraint of trade

Yes, unless we have previously taken a course in the work being requested

Yes, Section 1.300.010 establishes standards for professional competence that provide guidance similar to the advice given to us

25. What do Johnson & Johnson and Arthur Andersen have in common?

Both went from a reputation for the highest ethical behavior to actions demonstrating unethical behavior in a very sort number of years

Both are known for having consistently high ethical behavior

Both are known for having consistently low ethical behavior

Both are known for consistently having a strong ethical tone at the top

Both are known for consistently having an unethical tone at the top