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:

Convergence

In communication and social psychology, convergence refers to the process by which individuals adjust their communicative behaviors to be more similar to their communication partners, promoting understanding and rapport.

Reconciles

The process of making one belief, fact, or action compatible with another, often involving the resolution of differences and restoration of harmony.

Relationship Role

The function or part played by an individual within a relational context, often defined by social, cultural, or organizational norms and expectations.

Task Role

A behavioral pattern or role adopted by an individual within a group that aims at achieving the group's goals and tasks.