Chapter 8—Developing an Effective Ethics Program

MULTIPLE CHOICE

1. Fostering ethical decision making within an organization requires improving the firm's ethical
standards and
a. securing ethical suppliers.
b. conducting simulation exercises.
c. improving unethical persons.
d. terminating ethical persons.
e. terminating the 'bad apples' in the organization.
ANS: E PTS: 1

2. Which of the following statements about codes of conduct is false?

a. They are formal statements of what an organization expects in the way of ethical behavior.
b. They guarantee an ethical business climate.
c. They help employees determine what behaviors are acceptable.
d. They provide rules and guidelines for employees to follow.
e. They should be specific enough to be reasonably capable of preventing misconduct.
ANS: B PTS: 1

3. According to the text, in the absence of ethics programs, employees are likely to make decisions based
on
a. their observations of how their peers and superiors behave.
b. their observations of how their superiors behave.
c. their conscience.
d. their religious values.
e. their family values.
ANS: A PTS: 1

4. A strong ethics program includes all of the following elements except

a. an ethics officer with a record of misconduct.
b. a written code of conduct or ethics.
c. formal ethics training.
d. rigorous auditing, monitoring, enforcement, and revision of program standards.
e. an ethics officer to oversee the program.
ANS: A PTS: 1

5. ____ are formal statements of what an organization expects in the way of ethical behavior.
a. Mission statements
b. Codes of conduct
c. Policies on confidentiality
d. Environmental policies
e. The Federal Sentencing Guidelines for Organizations
ANS: B PTS: 1

6. What is not a common mistake when designing and implementing an ethics program?
1
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 a. Failing to fully understand the goals of the program
b. Not setting realistic or measurable goals
c. Having top management take ownership of the ethics program
d. Developing materials that do not address the needs of the average employee
e. Transferring a program between countries and cultures without making adjustments
ANS: C PTS: 1

7. A(n) ____ orientation creates order by requiring that employees identify with and commit to specific
required conduct, whereas a(n) ____ orientation strives to develop shared standards.
a. obedience; values
b. compliance; values
c. legal; values
d. values; compliance
e. values; obedience
ANS: B PTS: 1

8. For an ethical compliance program to properly function

a. consistent enforcement and disciplinary action are necessary.
b. employees must be monitored using any means necessary.
c. it is not necessary to set measurable program objectives.
d. the same program should be used in all countries of operation, regardless of cultural
differences.
e. the company must wait an appropriate amount of time before investigating any suspected
misconduct.
ANS: A PTS: 1
9. Which of the following is the most comprehensive?
a. Code of values
b. Code of conduct
c. Code of ethics
d. Statement of values
e. Statement of principles
ANS: C PTS: 1

10. At the heart of the Federal Sentencing Guidelines for Organizations is a

a. "tit-for-tat" philosophy.
b. Golden Rule philosophy.
c. Iron Rule philosophy.
d. carrot-and-stick philosophy that rewards efforts to improve ethics.
e. utilitarian philosophy.
ANS: D PTS: 1
11. The Federal Sentencing Guidelines for Organizations require federal judges to increase fines for
organizations that continually
a. improve their ethics programs.
b. eliminate misconduct.
c. fail to install a Federal Sentencing Guidelines program.
d. fail to report ethics program activities.
e. tolerate misconduct.

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from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 ANS: E PTS: 1
12. Which of the following has increased the responsibilities on ethics officers and boards of directors to
monitor financial reporting?
a. Sarbanes-Oxley Act
b. Federal Sentencing Guidelines for Employees
c. Ethics Officer Responsibility Act
d. Sherman Antitrust Act
e. Enron Financial Responsibility Act
ANS: A PTS: 1

13. What is not a minimum requirement of an ethics and compliance program, according to the FSGO?
a. Standards and procedures that are capable of detecting misconduct.
b. High level personnel are responsible for an ethics and compliance program.
c. Standards and procedures are not communicated; employees are just expected to know.
d. Consistent enforcement of standards, codes and punishment.
e. Continuous improvement of the program.
ANS: C PTS: 1

14. A legal test of a company's ethical compliance program is possible when an

a. individual employee is charged with misconduct.
b. audit of the ethics compliance program occurs.
c. outside auditing of the ethics program occurs.
d. internal attorney's risk assessment occurs.
e. outside attorney's risk assessment occurs.
ANS: A PTS: 1

15. All of the following are useful in monitoring ethical conduct and measuring the effectiveness of the
ethical program except
a. observation of employees.
b. internal audits.
c. firing.
d. surveys.
e. reporting systems.
ANS: C PTS: 1

16. A code of ethics that does not address specific high-risk activities within the scope of daily activities is
a. sufficient.
b. inadequate.
c. satisfactory.
d. acceptable as long as individual virtues prevent misconduct.
e. acceptable according to the Federal Sentencing Guidelines for Organizations.
ANS: B PTS: 1

17. Which of the following is not a responsibility of ethics officers?

a. Assessing the needs and risks that an ethics program must address.
b. Developing and distributing a code of conduct/ethics.
c. Ensuring the company is in compliance with government regulations.
d. Writing legislating pertaining to ethics.
3
© 2011 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 e. Monitoring and auditing ethical conduct.
ANS: E PTS: 1

18. Ethical decision making is influenced by

a. coworkers.
b. the tone at the top.
c. corporate culture.
d. opportunities to engage in unethical behavior.
e. Ethical decision making is influenced by all of these.
ANS: E PTS: 1

19. Which of the following is not a typical activity for an ethics officer?
a. Coordinating the U.S. Sentencing Commission annual ethics audit
b. Assessing needs and risks that the ethics program must address
c. Developing and distributing a code of ethics
d. Conducting ethics training programs
e. Monitoring and auditing ethical conduct
ANS: A PTS: 1

20. Which of the following is a common mistake made in implementing an ethics program?
a. Setting realistic and measurable program objectives
b. Developing materials that do not meet the needs of the average employee
c. Adapting a firm's ethics program for its international operations
d. Allowing employees to practice the skills they learn in ethics training through case studies
and/or group exercises
e. Management taking "ownership" of the ethics program
ANS: B PTS: 1

21. NYNEX Corp. set up an ethics hotline and received over 2,700 calls in one year. Which component of
the Federal Sentencing Guidelines for Organizations compliance program does this satisfy?
a. Code of conduct
b. Enforcement of standards, codes, and rules
c. Delegation of authority to ethical persons
d. Systems for monitoring, auditing, and reporting misconduct
e. Ethics training
ANS: D PTS: 1

22. Organizations can become "bad barrels" not because of unethical individuals but because
a. the pressures to succeed create opportunities that reward unethical decisions.
b. the pressures to succeed create opportunities that punish unethical decisions.
c. they lack leadership.
d. they lack values.
e. they lack apples.
ANS: A PTS: 1

23. Which of the following statements about training is false?

a. It can educate employees about the firm's policies and expectations, as well as relevant
4
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from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 laws and regulations and general social standards.
b. It can dictate personal ethics on the job.
c. It can make employees aware of available resources, support systems, and designated
personnel who can assist them with ethical and legal advice.
d. It can empower employees to ask tough questions and make ethical decisions.
e. It can affect the influence of organizational culture, coworkers and superiors, and
opportunity.
ANS: B PTS: 1

24. According to the text, a highly effective method of ethics training is

a. lectures.
b. videos.
c. religious training.
d. surveys.
e. exercise in resolving ethical dilemmas that relate to actual situations employees may face
on the job.
ANS: E PTS: 1
25. It is important for ethics programs to differentiate between organizational ethics and
a. the law.
b. societal ethics.
c. personal ethics.
d. supplier ethics.
e. Internet ethics.
ANS: C PTS: 1

26. Which of the following is not a goal of an ethics training program?

a. To identify the contact person who could help in resolving ethical problems
b. To improve employee understanding of ethical issues and the ability to identify them
c. To control employees' personal ethics and moral beliefs
d. To inform employees of related procedures and rules
e. To educate employees about formal ethical frameworks and models for analyzing business
ethics issues
ANS: C PTS: 1

27. In the long-run, a(n) ____-based orientation may be better for companies, perhaps because it increases
employees' awareness of ethics issues at work.
a. code
b. obedience
c. compliance
d. values
e. None of these.
ANS: D PTS: 1

28. The individual responsible for implementing disciplinary action for violation of a firm's ethics
standards is usually the
a. CEO.
b. president.
c. immediate supervisor.
5
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from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 d. ethics officer.
e. Chairman of the board.
ANS: D PTS: 1

29. To ensure that an ethics program addresses the needs of the average employee, it should include all of
the following except
a. feedback from employees across the firm.
b. a question-and-answer section.
c. additional resources for guidance.
d. checklists, illustrations, and even cartoons where appropriate.
e. complex "legalese" wording.
ANS: E PTS: 1

30. ____ serve as a central contact point where critical comments, dilemmas, and advice can be assigned
to the person most appropriate for handling a specific case
a. Training programs
b. Mission statements
c. Codes of conduct
d. Hotlines
e. Boards of directors
ANS: D PTS: 1

31. An organizational ethics program should help reduce the possibility of penalties and
a. positive public reaction to misconduct.
b. negative public reaction to ethical conduct.
c. negative public reaction to misconduct.
d. positive public reaction to ethical conduct.
e. indifferent public reaction to conduct.
ANS: C PTS: 1
32. Organizational probation, the ultimate "stick" associated with the FSGO, involves on-site observation
by consultants, monitoring of the company's ethical compliance efforts, and
a. reporting to the Sentencing Commission on the company's progress in avoiding
misconduct.
b. installation of an ethics hotline.
c. payment of any penalties levied.
d. appointment of an appropriate high-level manager to oversee the company's program.
e. divestiture of all assets.
ANS: A PTS: 1

33. Which of the following strives to create order by requiring that employees identify with and commit to
specific required conduct?
a. Conduct orientation
b. Values orientation
c. Coercive orientation
d. Obedience orientation
e. Compliance orientation
ANS: E PTS: 1
6
© 2011 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 34. Which of the following is not a common value that should be included in a code of ethics?
a. Fairness
b. Dishonesty
c. Responsibility
d. Respect
e. Trustworthiness
ANS: B PTS: 1

35. With regard to ethics, training and communication initiatives should reflect
a. the organization's management.
b. the organization's culture.
c. the organization's size.
d. the unique characteristics of an organization.
e. the organization's accounting systems.
ANS: D PTS: 1

ESSAY

36. How can organizations develop an effective ethics program?

ANS:
Pages 357-360

PTS: 1

37. How can ethical dilemmas and behavioral simulations help employees make more ethical decisions?

ANS:
Page 365

PTS: 1

38. Discuss how the minimum requirements for an ethical compliance program as suggested by the U.S.
Sentencing Commission could prevent or reduce unethical behavior within an organization.

ANS:
Pages 358-360

PTS: 1

39. Discuss the system the U.S. Sentencing Commission has devised of mitigating penalties for
organizations that have an effective ethical compliance program.

ANS:
Pages 358-359

PTS: 1

7
© 2011 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
40. Discuss the advantages and disadvantages of requiring ethical compliance in an organization versus
programs to improve the personal ethics of individuals within the organization.

ANS:
Pages 364-366

PTS: 1

8
© 2011 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.