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

question 527

Multiple Choice

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

• A) Inability to generate cash flows from operations while reporting substantial earnings growth.
• B) Management's lack of interest in increasing the entity's stock trend.
• C) Large amounts of liquid assets that are easily convertible into cash.
• D) Inability to borrow necessary capital without granting debt covenants.

---

Definitions:

Management Reports

Management reports are documents that provide managers with key financial and operational information needed to make informed decision-making.

Primary Objective

Denotes the main goal or purpose that an individual, group, or organization aims to achieve.

Reports

Documents that present an organized compilation of data and information, often used for analysis or decision-making.

Users

Individuals or entities that utilize or operate a product, service, system, or application.