An Operating Condition That Can Contribute to a Higher Risk

question 16

Multiple Choice

An operating condition that can contribute to a higher risk of fraud is:

• A) management by crisis.
• B) high company loyalty.
• C) flexible rules.
• D) proper authorization.

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Definitions:

Independent Directors

Board members who do not have a material or financial relationship with the company or its management, except for board service, providing objective judgement.

Shareholder Liability

The legal responsibility of shareholders for the debts or actions of a corporation, usually limited to their investment in the company.

Corporate Debts

Financial obligations or borrowings incurred by corporations, typically involving bonds or loans, used for business operations or expansions.

Corporation Dissolved

The process by which a corporation formally ceases operations, liquidates its assets, and terminates its legal existence.