Question

Which of the following is true?

1) Managerial accountants are the employees who are principally responsible for ethical behaviour.
2) Investment losses have been precipitated by lax ethical standards.
3)orporate fraud was found to have decreased between the years 1998 and 2003.
4) Expense account abuse has been cited as one of the rarest forms of unethical employee behaviour.

Answer 1

The correct statement is that investment losses have been precipitated by lax ethical standards, highlighting the importance of ethical behavior across all levels of a corporation, not just by managerial accountants.

Step-by-step explanation:

Among the statements provided, the one that is true is that investment losses have been precipitated by lax ethical standards. This is indicative of the broader issue that ethical behavior in business is critical not only for the internal health of the corporation but also for the confidence that investors, including shareholders, have in the firm. Unethical behavior, such as corporate fraud and abuse of expenses, can undermine trust and lead to financial losses.

While managerial accountants play a role in ensuring ethical behavior by providing accurate financial reports, it is not solely their responsibility; ethical behavior is the duty of all employees. Studies have shown that corporate fraud, including accounting fraud like that which occurred at companies such as Enron and WorldCom, actually increased significantly leading up to 2003. Additionally, expense account abuse is not one of the rarest forms of unethical behavior; it is unfortunately common and can be indicative of a lack of corporate oversight and governance.