Corporate Governance
True or False: a follower of shareholder theory would never support company donations to charity
false - donating to charities can increase shareholder value by improving public image HOWEVER would not support giving to charity simply for charity's sake
small, minor, insig. Payments to expedite routine, non discretionary items (All you are asking them to do is what they are suppose to do only faster)
what is a facilitating payment
true or false: a tax accountant may correct prior tax returns with or without client permission
false - needs client permission, may not inform IRS on client unless ordered by the court
persons who regularly speak on behalf of the company (ex: CFO, CEO, chair of board, head of investor relations)
what is a covered speaker?
anytime earnings management does something that causes earnings to be different that what they would be if normal business was conducted
what is earnings management
under this theory of corporate governance the Chair of the Board and the Chief Executive Officer should be different individuals
agency theory
is this a violation: Making large donations to a charity where the official is a board member
yes
includes anyone on the attest engagement team, those who can influence the engagement, or those who provide non-attest services to the client that could compromise independence
what is a covered member
a period when no insider/employe may trade stock of company
what is a black out period
components of this are opportunity, rational, motivation, capability
fraud diamond
This is any meeting of the BoD that excludes members of the management team. it is Common occurrence, especially with audit committee and compensation committee meetings
what is executive session
true or false: a CEO is not responsible for violating FCPA if the internal controls weren't strong enough
false
can a covered member remain independant if that have an Immediate Family member or Close Relative in a key position at the attest client, such as the attest client’s CEO
a plan that allows insiders to trade on company stock provided it is on set dates, of set amounts, and is publicly announced
what is a 10b5-1 plan
recording sales in one period then providing the customer with a credit in a subsequent period
what is channel stuffing
false - a two tiered system is made up of two boards:
“Supervisory Board” appointed by shareholders
“Management Board” appointed by Supervisory Board and has the C suite on it usuallys
can a CPA serve as trustee for for family trust of CEO
no - familiarity threat
no - if sydney were in a key position OR serving on the attest engagement it would be
refers to any information that is both new to the market and contains important information about the company
what is material nonpublic information
moving expenses are revenues to a different period in order to ensure consistency
What is expense smoothing
A person entrusted with other people’s money or items of value, or servings as the manager, custodian, or decision marker for another party
what is a fiduciary
true or false: If a CPA tax preparer who determines that a tax position has a 75% of being resolved unfavorably to the client; then the CPA must not allow the client to take that position on the tax return
false -
Tax papers shall not
Recommend a tax position to avoid the known or suspected audit selection process of a tax authority
Create or recommend a tax position simply to create an arguing position or a negotiating position
sign a tax return with only 20% of success
The yoga studio EY is auditing does not like the opinion its auditors issued so they are suing EY. Can EY stay independant ?
no - this called adverse interest threat and it is caused by the impending litigation
sydney is ceo of company X and knows about an impending acquisition of her company by company Y. she uses this knowledge to trade on stocks of company Z and makes a huge profit. Is this a violation of reg FD?
yes - this shadow trading
this technique treats operating expenses as an assets
what is capitalizing expenses