Which of the Following Factors Most Likely Would Heighten an Auditor's

question 908

Multiple Choice

Which of the following factors most likely would heighten an auditor's concern about the risk of fraudulent financial reporting?

• A) Large amounts of liquid assets that are easily convertible into cash.
• B) Low growth and profitability as compared to other entities in the same industry.
• C) Financial management's participation in the initial selection of accounting principles.
• D) An overly complex organizational structure involving unusual lines of authority.

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Definitions:

Organization Analysis

Examination of the environment, strategies, and resources of the organization to determine where training emphasis should be placed.

Competencies

The combination of skills, knowledge, and abilities that are required to perform a job effectively.

Training Effort

The intensity and resources devoted by an organization towards improving the skills and knowledge of its employees.

Teaching Skills

The abilities and techniques that enable an individual to effectively convey knowledge, facilitate learning, and foster development in others.