Which Factors Would Likely Increase an Auditor's Concern Pertaining to Risk

question 61

Multiple Choice

Which factors would likely increase an auditor's concern pertaining to risk of fraudulent financial reporting?

• A)Excessive amount of liquid assets that could easily be converted to cash.
• B)Low profitability/growth with respect to competitors in the same industry.
• C)Management participation in selection of accounting methods and principles.
• D)An extremely confusing and overly complex institutional structure, with blurred lines of authority.

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Definitions:

Cooperation

The act of working together towards a common goal or benefit, often involving sharing knowledge, resources, or efforts.

Insufficient

means not enough, lacking in quantity, quality, or degree required.

Communication

The process of exchanging information, ideas, feelings, and messages between individuals or groups.

Rewards

Benefits, compensations, or recognitions provided to individuals or groups in response to their achievements or desired behaviors.