Which of the Following Would the Auditor Be Most Concerned

question 36

Multiple Choice

Which of the following would the auditor be most concerned about regarding a heightened risk of intentional misstatement?

• A) senior management emphasizes that it is very important to beat analyst estimates of earnings every reporting period
• B) senior management emphasizes that budgeted amounts for expenses are to be achieved for each reporting period or explained in the variance analysis report
• C) senior management emphasizes that job rotation is a worthwhile corporate objective
• D) senior management emphasizes that job evaluations are based on performance

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Definitions:

Initial Margin

The minimum amount of equity required to enter into a position as security for performance, used in futures and margin trading.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account.

Margin Call

A demand by a broker that an investor deposit additional money or securities to cover possible losses.

Initial Margin

The minimum amount of equity that must be provided by an investor when purchasing securities on margin, acting as a down payment on the purchase.