1. Which of the following is a problem resulting from the emphasis on earnings?
Managers may ignore sales forecast
Internal controls may deteriorate
Quality of earnings may suffer
Responsibility of Lower level managers may increase
2. A public traded firm must have
A functioning board of directors
A CFO with significant accounting experience
A specific time each week to meet with employees regarding potential fraud
An ethics committee
3. The audit committee is
A part of the internal audit function
A subset of directors who Must be independent.
No longer part of corporate governance
Chaired by a CPA
4. Who is responsible for selecting, hiring and compensating the external auditors?
CEO
CFO
Audit committee of the BOD
All of the above
5. High quality earnings are those that
Fluctuate widely between periods
Provide accurate and reliable information about the firms earnings.
Exceed $1 per share
Are found in the shareholders equity section of the balance sheet.