Deck 8: Ethical Leadership and Decision-Making in Accounting

Question 1

Servant leaders:

A) Advocate a perspective that leaders have a responsibility to serve their followers by helping them to achieve followers' goals
B) Servant leadership is the flip side of authentic leadership
C) Promote a culture that enhances organizational outcomes
D) Help followers to fulfill their needs by modeling ethical values, attitudes and behaviors

Answer 1

D

Question 2

A good example of antisocial behavior is:

A) Dennis Kozlowski's use of corporate resources for personal purposes
B) Betty Vinson's decisions to go along with financial wrongdoing
C) Jeff Skilling's policy of "rank and yank"
D) Whistleblowing by Cynthia Cooper

Answer 2

C

Question 3

The more intense the ethical issues, the more likely:

A) Decision makers will act in accordance with their own ethical values
B) Decision makers are aware of the ethical implications of their intended actions
C) Organizations will foster ethical behavior
D) Organizations will establish an ethical tone at the top

Answer 3

B

Question 4

Transformational leaders:

A) Empower employees to act based on their ethical goals and values
B) Follow what top management sets as its goals for the organization
C) Causes change in individuals and social systems
D) Connect the follower's behavior to the collective identity of the organization

Question 5

To be an ethical leader, executives must also:

A) Attend to cultivating ethics and be an ethical person
B) Attend to client's interest and be a moral person
C) Serve in followership roles
D) Serve as servant leaders

Question 6

An important factor in evaluating moral intensity is:

A) Temporal immediacy of the effect of the moral act
B) Consequences of proximity of the moral agent and ethical leadership
C) Influence of moral judgment on moral intensity
D) All of the above are relevant factors

Question 7

Leaders who engage in unethical behaviors create a context supporting:

A) Cognitive dissonance
B) Parallel deviance
C) Moral intensity
D) Leader perseverance

Question 8

It can be said about followership that:

A) Followership is the same as leadership
B) Followership and servant leadership are the same
C) Followership is the flip side of leadership
D) Followers are always transformational leaders

Question 9

Trevino et al. believe ethical leaders possess each of the following two traits:

A) Moral follower and moral servant
B) Moral person and moral manager
C) Moral person and moral employee
D) Moral person and transformational leader

Question 10

Social Learning Theory holds that:

A) Employees learn what to do by observing their leaders' behavior and its consequences
B) Employees learn what not to do by observing their leaders' behavior and its consequences
C) Employees learn what to do and what not to do by observing their leaders' behavior and its consequences
D) Employees learn what to do and what not to do when antisocial behaviors exist

Question 11

The statement about leadership attributed to Ciulla is:

A) Visions are not simple goals, but rather ways of seeing the future that implicitly or explicitly entail some notion of the good
B) Principle-centered leaders build greater, more trusting and communicative relationships with others in the workplace
C) Leaders lead by example not based on what they say
D) Leaders always follow the law even if it deviates from ethical action

Question 12

It can be said that ethical leaders exhibit each of the following traits except for:

A) Ethical leaders understand the need for respect, openness and trust
B) Ethical leaders aim to empower others to achieve success based on right action
C) Ethical leaders take responsibility for their actions and are accountable
D) Ethical leaders encourage behaviors whereby employees do what the leaders say

Question 13

Taylor and Curtis found from their study of whistleblowing among public accounting seniors that:

A) Moral intensity affects the intention to report wrongdoing
B) Moral intensity is independent of the intention to report wrongdoing
C) Ethical leaders ignore the magnitude of consequences when deciding whether to blow the whistle
D) Ethical leaders base their decision whether to blow the whistle on temporal immediacy of the effect of the moral act

Question 14

Each of the following is a factor that needs to be evaluated for moral intensity except:

A) Magnitude of consequences of the moral act
B) Degree of social consensus that the moral act is unethical
C) Feelings of proximity of the moral agent to the moral act
D) All of the above are relevant factors

Question 15

Followership, servant leaders, and authenticity all share the following common characteristic:

A) Values-based leadership
B) Sensitivity to ethical dilemmas
C) Adherence to organizational norms even if it means compromising one's values
D) Leader ethicality

Question 16

To hold employees accountable to ethical standards, moral managers:

A) Walk the talk of leadership
B) Use reward systems to encourage ethical performance
C) Strive to do what is right regardless of the consequences of one's actions
D) All of the above

Question 17

De Cremer and Tenbrunsel characterize ethical leadership in part as:

A) Intention to demonstrate normatively appropriate conduct
B) Environment that promotes transformational leadership
C) Influencing followers to always adhere to leaders' goals for the organization
D) Environment that promotes servant leadership

Question 18

An authentic leader:

A) Is focused on building long-term shareholder value, not in just beating quarterly estimates
B) Is focused on controlling management's desires to beat quarterly estimates
C) Empowers employees to make choices after discussing them with leaders
D) Acts consistently with norms of behavior

Question 19

With respect to leadership in the accounting profession, it might be said that:

A) Ethical judgment is more important than how one makes decisions
B) Partners must exhibit moral imagination through ethical perception of what it means to be ethical, professional, and successful
C) Partners must exhibit ethical decision making through ethical sensitivity to the needs of one's firm
D) How one makes decisions is more important than ethical leadership

Question 20

In accounting, building a reputation for ethical leadership means to:

A) Enable ethics and values to take place without fear of retaliation
B) Enable ethics and values to shine through the fog of beating the competition and meeting financial projections
C) Refrain from using non-GAAP measures of earnings
D) Create an environment that fosters short-term shareholder value

Question 21

An essential element in creating an ethical environment in an audit firm is:

A) Socialization of employees
B) Moral intensity of the situation
C) Responsible leadership of the firm
D) Firm values, behavior and attitudes

Question 22

Arel et al. in their study of ethical leadership, the internal audit function, and moral intensity on a decision to record a questionable entry found that:

A) There is a joint influence of ethical leadership and internal audit quality on accountants' willingness to book a questionable entry
B) There is a joint influence of internal audit quality and tone at the top on accountants' willingness to book a questionable entry
C) Ethical leadership does not influence accountants' willingness to book a questionable entry
D) Internal audit quality does not influence accountants' willingness to book a questionable entry

Question 23

According to Mesmer-Magnus and Viswesvaran, organizational employees have three options to address an unsatisfactory situation faced within an organization. These include:

A) Exit the organization, voice discontent, discuss matters with the board of directors
B) Exit the organization, remain silent, report the matter to the external auditors
C) Exit the organization, remain silent, voice discontent
D) Exit the organization, blow the whistle, report the matter to the authorities

Question 24

A unique aspect of the story of ethical leadership illustrated by Diem-Thi Le is that:

A) Le's working papers were altered by her supervisor
B) Le's audit opinion was changed from modified to unmodified
C) Le's whistleblowing complaint did not lead to retaliation
D) Le was fired from her job

Question 25

The fraud at HealthSouth at the structural level of the company was more intense because:

A) The external auditors went along with the fraud
B) The board of directors managed the fraud
C) Checks and balances were eliminated and organizational culture was compromised
D) There was no hotline to report financial fraud

Question 26

Selection-socialization bias in audit firms pertains to:

A) Whether a firm hires and promotes individuals who fit into the prevailing firm culture and whether individuals unable to fit leave
B) Whether a firm fires individuals who do not fit into the prevailing firm culture
C) Whether individuals choose to work for a particular firm
D) Effective leadership and followership

Question 27

Organizational dissidence in audit firms is created when:

A) Client interests are placed ahead of the public interest
B) Firm interests are placed ahead of the public interest
C) Individual values do not fit into expectations of the firm
D) Individual values lead to firms changing their values to achieve greater socialization

Question 28

Leadership in accounting is different than leadership in most other organizations because:

A) Accountants are regulated by state board of accountancy
B) Accountants are expected to place the public interest above all else
C) Accountants are obligated to follow a strict code of ethics
D) Accountants are answerable to firm management, not their clients

Question 29

Ethical leadership failure can be caused by:

A) Lines of communication are blurred
B) Ignoring ethical boundaries within a company
C) Organizational factors promote unethical action
D) All of the above

Question 30

The ethical environment within an accounting firm is created through adherence to the:

A) AICPA Code of Professional Conduct
B) Rules and regulations of the SEC
C) Stated values and management practices
D) Moral intensity and management practices

Question 31

The results of Morris's study of the influence of authentic leadership and ethical firm culture on auditor behavior is:

A) A significant positive correlation exists between authentic leadership and dysfunctional audit behaviors
B) A significant negative correlation exists between authentic leadership and dysfunctional audit behaviors
C) Audit seniors more frequently prematurely sign off on audit work than under-report time
D) Audit seniors act on their own values regardless of their perceptions of the firm culture

Question 32

Bobek et al. found that nonpartners are more likely to perceive the ethical environment of their firm as strong when they:

A) Believe they have a meaningful role in shaping and maintaining the ethical environment of their firms
B) Believe ethical leaders consider their interests in firm decision making
C) Are included in firm decision making
D) Have a high frequency of receiving mentoring

Question 33

The ethical failures in the leaders at Andersen was caused by:

A) Caused by volitional and cognitive rationalizations
B) Caused by violations of social contracts with shareholders, investors, and the public
C) Caused by deficiencies in internal controls
D) Caused by considering the interests of parties outside their group of followers

Question 34

Accountants may hesitate to record a questionable entry if they know:

A) Internal audit is likely to detect the possible error
B) Internal audit is likely to detect the inappropriate financial reporting practices
C) Internal audit is likely to communicate it to the external auditors
D) Internal audit is likely to blow the whistle on inappropriate financial reporting practices

Question 35

In Bobek's study of the effect of gender on decision-making of public accounting professionals, it was found that:

A) Males were more likely than females to concede to the client's demands in an audit condition
B) Males were less likely than females to concede to the client's demand in an audit condition
C) Males are more likely than females to use an intuitionist approach in decision making
D) Males were less likely to concede to the client's demands on a tax condition than an audit condition

Question 36

Taylor and Curtis studied the complex relationships in accounting firms that influence an individual's decision to report an ethical violation and found at the center of these potentially conflicting layers of commitment lies:

A) Auditor perceived professional identity
B) Ethical leadership
C) Seriousness of the violation
D) The ethical violation itself and the individual's personal reaction to it

Question 37

In Brennan and Kelly's study of the factors that influence propensity or willingness to blow the whistle among audit trainees, the authors identified each of the following factors except:

A) Audit firm organizational structures
B) Audit firm ethical leadership
C) Personal characteristics of whistleblowers
D) Situational variables

Question 38

Ponemon hypothesized that there is a correlation between:

A) Moral intensity and subordinates' personal characteristics and decision-making styles
B) Organizational culture and subordinates' personal characteristics and decision-making styles
C) Culture of the organization and leadership style
D) Leadership style and followership

Question 39

Bobek et al. found a disconnect between tax partners and nonpartner tax practitioners with respect to:

A) Perceptions of ethical leadership when they described a self-identified ethical dilemma
B) Perceptions of ethical leadership when there was a difference of opinion on a tax matter
C) Perceptions of organizational ethics when they described a self-identified ethical dilemma
D) Perceptions of organizational ethics when there was a difference of opinion on a tax matter

Question 40

Which of the following is NOT an attribute of internal audit leadership according to Chambers?

A) Honesty
B) Objectivity
C) Accountability
D) Trustworthiness

Question 41

The Ethical Leadership Scale developed by Kelly and Early identify each of the following measures of leadership:

A) Personal ethical competence, ethical leadership, and ethical standards
B) Personal ethical competence, ethical standards, and ethical organization
C) Personal ethical competence, ethical leadership, and ethical organization
D) Ethical leadership, moral intensity, and ethical culture

Question 42

The ethical dilemma in the Research Triangle Software Innovations case can best be summed up as:

A) Should an auditor share information about a client with a nonaudit member of the firm?
B) Is it appropriate to select an audit client's ERP software for a different advisory services client?
C) Should the audit firm recommend its own ERP software package to an audit client?
D) Is it appropriate to engage in ERP management advisory services for an audit client?

Question 43

What is the role of moral intensity, organizational culture, and ethical leadership in promoting ethical behavior?

Question 44

One of the key questions raised by the facts of the Friars For Life case is:

A) Should the client be allowed to determine what appears in the financial statements?
B) Should audit firms develop tax shelter arrangements for wealthy clients?
C) Should audit firms discuss their audit opinions with clients?
D) Should the client be able to record revenues from future scheduled transactions?

Question 45

The Giving Voice to Values framework distinguishes between organizational and individual values because:

A) Organizational values are internal to each individual while individual values are highly visible within the organization
B) Organizational values are highly visible within the organization while individual values are internal to the very core of individuals
C) Organizational values are influenced by ethical leadership while individual values are influenced by perceptions of organizational values
D) Organizational values create perceptions of ethical leadership while individual values are innate to the individual

Question 46

Ethical leadership competence refers to:

A) Leaders ability to deal with moral problems in an autonomous way
B) Leaders ability to deal with moral problems in an automatic way
C) Leaders ability to set the tone of the organization as an ethical one
D) Leaders ability to develop problem-solving and decision-making skills

Question 47

Character and leadership go hand in hand. Explain the elements of character-based leadership.

Question 48

Explain what ethical leadership is in the context of ethical behavior in organizations and decision making and how ethical competence can be developed.

Question 49

The leadership style of management at Krispy Kreme can best be summed up as:

A) Aggressively sought to manage earnings using round-trip transactions
B) Pressured auditors to overlook material misstatements in the financial statements
C) Encouraged employees to engage in deception and fraud through franchisees
D) All of the above

Question 50

Distinguish between authentic leaders, transformational leadership, followership, and servant leadership. Include in your discussion the goals of each type of leadership.

Question 51

With respect to ethical leadership, the issue in the General Electric case can best be characterized as:

A) The relationship between the chief internal auditor and CEO
B) The leadership style of the executives and culture of the company
C) The leadership style of the chief internal auditor and tone at the top
D) The relationship between an audit client and management advisory services client

Question 52

Discuss the role of ethical leadership behavior in public accounting firms and how ethical leadership influences the internal communication and employee outcomes in the organization.

Question 53

We have many discussions about ethical behavior in this book. Describe how each of the following influence leadership behavior in accounting:
Josephson's Six Pillars of Character
Virtue-based ethical decision making
Usefulness of codes of ethics and the AICPA Code in making ethical decisions
Role of moral courage in decision making
Leadership and codes/basis for ethical behavior
Dealing with ethical dilemmas in the workplace
Kidder's structure to deal with ethical dilemmas and decision making
Whistleblowing in accounting
Role of leadership in promoting ethical behavior

Question 54

On an organizational level, the key issue in the Healthsouth case is:

A) The influence of moral intensity on ethical decision making
B) The influence of ethical leadership on accounting and auditing
C) The role of ethical leadership and corporate governance in the accounting fraud
D) The role of professional skepticism and moral intensity in corporate governance and accounting fraud

Question 55

The KPMG tax shelter case deals with:

A) The culture of the tax practice and aggressive marketing of tax shelters to wealthy clients
B) The influence of independence and objectivity in selling tax shelter products to audit clients
C) The use of the a realistic possibility of success opinion letter on tax shelters for clients
D) The aggressiveness of tax clients in demanding the firm provide opinion letters on tax shelter products

Question 56

Discuss how moral intensity, organizational culture, and ethical leadership influence behavior in accounting.

Question 57

Values-based leadership can best be summed up as:

A) Clearly articulating a vision for the organization
B) Defining organizational values and work culture
C) Clearly articulating and demonstrating one's values
D) Using the Giving Voice to Values methodology to create a culture of compliance