Which of the Following Organizational Characteristics Is a Possible Fraud

question 18

Multiple Choice

Which of the following organizational characteristics is a possible fraud red flag:

• A) A board of directors comprised mainly of outsiders.
• B) An independent internal audit department.
• C) An audit committee comprised mainly of insiders.
• D) An overstaffed accounting department.

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Definitions:

Habituation

The process by which an individual becomes accustomed to a stimulus and reacts less strongly over time.

Perceptual Constancy

Perceiving objects as maintaining their identity although sensations from them change as their positions change.

Perceptual Constancy

The brain's ability to perceive objects as unchanging (having consistent shape, size, and color) despite changes in perspective, distance, and lighting.

Size Constancy

The perceptual stability of the size of objects in the world, perceiving them as having a constant size, despite changes in the distance from which they are viewed.