The Auditor Is Most Likely to Presume That a High

question 49

Multiple Choice

The auditor is most likely to presume that a high risk of a fraud relating to the misappropriation of assets exists if:

• A)the entity is a multinational company that does business in numerous foreign countries.
• B)the entity does business with several related parties.
• C)inadequate segregation of duties places an employee in a position to perpetrate and conceal theft.
• D)inadequate employee training results in lengthy EDP exception reports each month.

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Definitions:

Output

The total amount of goods and services produced by a business, industry, or economy.

Total Variable Costs

The sum of expenses that vary with production volume, including costs for raw materials, labor, and utilities directly involved in the production process.

Decreasing Output

A situation where a firm produces less output over time, often due to rising costs or decreased demand.

Always Decrease

A scenario where a variable or condition consistently declines over a period of time without increasing.