Four underlying problems that called pre-SOX federal security law adequacy into question were addressed in the text. Discuss two of these problems
Lack of auditor independence. Auditing firms that provide other services to audit clients lack independence. They are, in effect, auditing their own work.
Lack of director independence. Many boards of directors have members that serve of boards of other directors' companies, or have a business trading, financial or operational relationship with the company. The majority of directors should be independent outsiders.
Questionable executive compensation schemes. There is a strong belief that executives have abused stock-based compensation. The consensus is that fewer stock options should be offered than is typical under current practice. In extreme cases, financial statement misrepresentation has been used to achieve stock prices needed to exercise options.
Inappropriate accounting practices. The use of inappropriate accounting techniques is a common characteristic in many financial statement fraud schemes.
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Virtually every company should have a "service department."
Indicate whether the statement is true or false
A manager who is instructing his employee about work tasks is communicating
A. informally. B. horizontally. C. externally. D. through the grapevine. E. vertically.
Suppose Bill's credit card is stolen and he notified his credit card company of this fact. Which of the following is true regarding the amount of unauthorized charges made before Bill notified his credit card company?
a. Bill is not responsible for any of the unathorized charges. b. Bill is responsible for the first $50 of unathorized charges. c. Bill is responsible for the first $100 of unauthorized charges. d. Bill is responsible for half of the unauthorized charges.
In the context of training, which of the following suggestions will maximize trainees' identification with a model?
A. Rank the behaviors to be modeled in a sequence from most to least difficult, and be sure that the trainees are unaware of repetitions of the behaviors being modeled. B. The model must be different from the observer in age, gender, and race. C. Provide the trainees with a list of key behaviors to attend to when observing the model, and allow them to express the behaviors in language that is most comfortable for them. D. Have a single model portray the behaviors.