Auditors Must Consider Whether There Are Any Fraud Risk Factors

question 4

Multiple Choice

Auditors must consider whether there are any fraud risk factors present when they are obtaining an understanding of the entity and its environment. Which of the following is not considered a fraud factor?

• A) incentives/pressures.
• B) attitudes/rationalisation.
• C) opportunities.
• D) length of employment.

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Definitions:

Consolidated Net Income

The total profit of a parent company and its subsidiaries after taxes and interest, combined into one financial statement.

Controlling Interest

An ownership interest in a business entity sufficient to provide the power to direct its policies and management.

Book Value

The net value of a company's assets minus its liabilities, often used to assess a company's financial health on its balance sheet.

Partial Equity Method

An accounting approach where an investor recognizes investment income only to the extent that dividends are received from the investee, differing from the full equity method.