AP®︎ Business with Personal Finance: Topic 3.9 Flashcards

Using financial resources only for authorized purposes, recording transactions accurately, obeying relevant laws, and meeting responsibilities to stakeholders

Presenting a business’s financial condition and performance completely, accurately, and truthfully rather than manipulating the information

Illegal conduct violates law, while unethical conduct may instead violate professional or internal standards; merely obeying the law does not prove conduct is ethical

Using money for a purpose other than its authorized business purpose, even if the money is not permanently stolen

The theft or fraudulent appropriation of money or property by someone who was entrusted with access to or control over it

The illegal use of deception or concealment to avoid taxes owed, unlike lawful tax planning or tax avoidance

Offering, giving, requesting, or receiving something of value to influence a decision improperly

Transparency provides entitled stakeholders relevant financial information clearly, completely, and promptly; lack of transparency conceals, delays, obscures, or selectively discloses it

Intentional deception intended to produce an improper benefit or cause another party to act in reliance on false information

Intentionally falsifying financial-statement information or omitting significant information to portray a business as better or worse than it really is

An incentive supplies a reason to benefit from misconduct, while an opportunity supplies the access, authority, or weak oversight needed to commit or conceal it

Individual motives for misconduct, such as stealing money, receiving a bribe, earning a bonus, protecting a job, or avoiding personal loss

Business motives for misrepresentation, such as supporting stock price, attracting investors, obtaining better loan terms, concealing poor performance, or reducing taxes

Rules intended to give investors accurate financial information and protect them from fraud, supporting confidence in investment markets

An examination by an independent accounting firm of records and evidence to assess whether financial statements fairly present the business’s condition and performance

Standards maintained by a professional organization that establish ethical expectations for members and may exceed minimum legal requirements

Providing truthful records, statements, and communications and correcting known false information

Acting consistently with ethical and professional responsibilities, including resisting pressure to participate in deceptive conduct

Making judgments from evidence rather than personal gain, favoritism, pressure, or conflicts of interest

Protecting private information and sharing it only with authorized parties or as required by law, without using secrecy to conceal fraud

Business mechanisms that reduce opportunities for misconduct, clarify authority, create evidence, and increase the chance of detection

An internal statement of expected employee and manager behavior, including rules for records, conflicts, gifts, business property, confidentiality, and reporting concerns

Processes that limit unsupervised access to money through restricted access, approvals, documentation, reconciliations, and review of unusual transactions

Assigning receipt, recording, authorization, payment, and review tasks to different people so one person cannot both commit and conceal misconduct

Required internal or external independent reviews that increase the likelihood that altered records, diverted funds, or other misconduct will be detected