Which of the Following Situations Would an Auditor Consider a Potential

question 29

Multiple Choice

Which of the following situations would an auditor consider a potential risk factor for misstatements from fraudulent financial reporting?

• A)Several members of management have recently purchased additional shares of the entity's stock.
• B)Several members of the board of directors have recently sold shares of the entity's stock.
• C)The entity distributes financial forecasts to financial analysts that predict conservative operating results.
• D)Management is interested in maintaining the entity's earnings trend by using aggressive accounting practices.

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