Auditing and Assurance Services, 17e (Arens/Elder/Beasley)

Chapter 4 Professional Ethics

4.1 Learning Objective 4-1

1) Ethics are
A) needed in the professions, but is not needed for society in general.
B) a set of moral principles or values.
C) not formed by life experiences.
D) always incorporated in laws.
Answer: B
Terms: Ethical Principles
Difficulty: Easy
Objective: LO 4-1
AACSB: Ethical understanding and reasoning

2) ________ means that a person acts according to conscience, regardless of the situation.
A) Caring
B) Fairness
C) Integrity
D) Respect
Answer: C
Terms: Ethical principles and integrity
Difficulty: Moderate
Objective: LO 4-1
AACSB: Ethical understanding and reasoning

3) Which of the following is a prescribed set of moral principles or values?

A) codes of business ethics for professional groups
B) laws and regulations
C) codes of conduct within an organization
D) all of the above
Answer: D
Terms: Ethical Principles
Difficulty: Easy
Objective: LO 4-1
AACSB: Ethical understanding and reasoning

4) One of the main reasons people act unethically is that they choose to act selfishly.
Answer: TRUE
Terms: Ethical Principles
Difficulty: Easy
Objective: LO 4-1
AACSB: Ethical understanding and reasoning
5) Most people define unethical behavior as conduct that differs from what they believe is
appropriate given the circumstances.
Answer: TRUE
Terms: Unethical behavior
Difficulty: Easy
Objective: LO 4-1
AACSB: Ethical understanding and reasoning

6) PCAOB inspections, especially information related to future inspections which will be made
by the PCAOB staff and personnel of public company audits, is publicly available information.
Answer: FALSE
Terms: Ethical Principles and Confidential Information
Difficulty: Easy
Objective: LO 4-1
AACSB: Ethical understanding and reasoning

7) Ethical values such as caring have been incorporated into the laws, as caring now been
defined enough to be legally enforceable.
Answer: FALSE
Terms: Ethical Principles
Difficulty: Easy
Objective: LO 4-1
AACSB: Ethical understanding and reasoning

4.2 Learning Objective 4-2

1) A six-step approach is often used to resolve an ethical dilemma. The first step in this process
is to
A) identify the alternative actions available.
B) identify the ethical issues from the facts.
C) determine who will be affected by the outcome of the dilemma.
D) obtain the relevant facts.
Answer: D
Terms: Ethical dilemma
Difficulty: Moderate
Objective: LO 4-2
AACSB: Ethical understanding and reasoning

2) Ethical frameworks help identify the ethical issues and will always lead to the appropriate
course of action.
Answer: FALSE
Terms: Ethical Frameworks
Difficulty: Moderate
Objective: LO 4-2
AACSB: Ethical understanding and reasoning