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:

Transitional Matrix

A mathematical matrix concerned with the probabilities of switching from one state to another in various processes or systems.

Human Resource Planning

The strategic process organizations use to forecast their future human resource needs and develop plans to ensure the right number and kind of people are available when needed.

Labor Surplus

A situation where the supply of labor exceeds the demand, often leading to unemployment or lower wages.

Financial Losses

Negative financial outcomes resulting from business operations, investments, or other financial activities, where expenses exceed revenues.