Fraud Risk Factors Are Examples of Factors That Increase the Risk

question 31

Multiple Choice

Fraud risk factors are examples of factors that increase the risk of fraud.Which of the following is an example of a management "opportunities" risk factor?

• A)The company has lost a major account and income is falling.
• B)Two major competitors have gone bankrupt as margins decline in the industry.
• C)The Chief Executive Officer owns forty percent of the outstanding share capital.
• D)New accounting standards provide three different methods for valuing financial instruments.

---

Definitions:

Consolidated Inventory

The total value of all inventories held by a parent company and its subsidiaries, accounted for in a consolidated financial statement.

Unrealized Inventory Profits

Profits that are reported on paper through an increase in inventory value but have not yet been realized through sales.

Significant Influence

Significant Influence is the ability of an investor to affect the financial or operating policy decisions of the investee through ownership, contracts, or other means, short of full control or joint control.

Goodwill

An intangible asset that arises when a company acquires another company for more than the fair value of its net identifiable assets at the purchase date.