Which of the Following Items Is NOT True, According to the Study

question 4

Multiple Choice

Which of the following items is NOT true, according to the study done by the Committee of Sponsoring Organizations (COSO) ?

• A) Frauds were most commonly perpetrated by improper revenue recognition, overstating assets, and understating expenses.
• B) The average financial statement fraud period extended over 5 years and the frequency of fraudulent acts was sporadic during the period.
• C) Severe consequences were associated with companies who committed financial statement fraud (e.g., Chapter 11 bankruptcy, stock was delisted, lawsuits by stockholders or bondholders).
• D) Most companies were experiencing net losses or were just holding break-even positions in periods prior to the fraud. Meaning, many frauds were used to reverse downward spirals or to maintain upward trends.

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Definitions:

Intervening Cause

An event or factor occurring after a party's initial act that significantly contributes to an outcome or event, potentially absolving the original actor of liability.

Proximate Causation

A principle in law that establishes the legal cause of an event based on the foreseeability of the harm and a direct relation to the injury.

Actual Causation

The fact-based determination that a defendant's action was the direct cause of the plaintiff's injury.

But-For Causation

A principle in law that determines causality by asking whether the harm would not have occurred but for the defendant's actions.