Fraud Risk Factors Are Examples of Factors That Increase the Risk

question 8

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 "incentives or pressures" risk factor?

• A)Customer demand for a new product line was significantly less than expected.
• B)Management and the auditors disagree on how to value a large contract in progress.
• C)There is only one board member who understands financial statements and she has suffered a heart attack.
• D)There has been significant turnover in the accounting department in the last year.

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Definitions:

Internationally Traded Goods

Products and services that are bought and sold across national borders, subject to international agreements and regulations.

Comparative Advantage

The capability of an entity to manufacture a product or provide a service at a reduced opportunity cost compared to its competitors.

Opportunity Cost

The cost of foregone alternatives, the value of the next best alternative that is given up when making a decision.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors, leading to more efficient trade and production patterns.