Which of the Following Circumstances Would an Auditor Most Likely

question 45

Multiple Choice

Which of the following circumstances would an auditor most likely consider a risk factor relating to misstatements arising 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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Definitions:

Autism Spectrum Disorder

A range of neurodevelopmental conditions characterized by challenges in social interaction, communication, and restricted or repetitive behaviors and interests.

Attention-Deficit Disorder

A neurological disorder characterized by a pattern of inattention and/or hyperactivity-impulsivity that interferes with functioning or development.

Intellectual Disability

A developmental disorder characterized by significant limitations in both intellectual functioning and in adaptive behavior, which covers many everyday social and practical skills.

Neurological Problems

Disorders that affect the brain, spine, or nerves, including conditions like epilepsy, Parkinson’s disease, and multiple sclerosis.