The CEO of a Medium-Sized Insurance Company in a Medium-Sized

question 132

Multiple Choice

The CEO of a medium-sized insurance company in a medium-sized city in Tennessee is reluctant to authorize the expenditure for a security audit.The CEO maintains that since Tennessee is not subject to hurricanes or earthquakes and there are no obvious terrorist targets nearby,a security audit would be a waste time and money.As the director of HR,you should

• A) agree with the CEO because of the low probability of security threats.
• B) point out that OSHA requires security audits for firms with over 1,000 employees.
• C) indicate that insurance premiums are lower for firms that conduct security audits.
• D) argue that the company deals with sensitive data subject to unauthorized access.

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Definitions:

Conservatism

An accounting principle that mandates recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but only recognizing revenues and assets when they are assured of being received.

Patent Amortization Expense

The gradual expensing of the cost associated with a patent over its useful life, reflecting the consumption of the patent's value.

Infringement

The action of violating a law, agreement, or the rights of another, especially intellectual property rights.

Legal Costs

Expenses incurred due to legal services, which may include lawyer fees, court fees, and other related costs.