Which of the Following Would Heighten an Auditor's Concern About

question 36

Multiple Choice

Which of the following would heighten an auditor's concern about the risk of fraudulent financial reporting?

• A) Inability to generate positive cash flows from operations, while reporting large increases in earnings.
• B) Management's lack of interest in increasing the dividend paid on common stock.
• C) Large amounts of liquid assets that are easily convertible into cash.
• D) Inability to borrow necessary capital without obtaining waivers on debt covenants.

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Definitions:

Transferable Quota

A system where certain rights (often to produce a certain amount of goods or emit a certain amount of pollutants) can be exchanged between entities.

Fisheries Management

The regulation and supervision of fishing activities to ensure sustainable use of aquatic resources.

Marine Animals

Aquatic organisms that live in the ocean and other saltwater environments.

Fishery

A stock of fish or other marine animal that is composed of a distinct group, for example New England cod, Pacific tuna, or Alaskan crab.