CFA Practice Question

There are 90 practice questions for this study session.

CFA Practice Question

According to SAS 99, which of the following is least likely to be a risk factor related to attitudes/rationalizations to commit fraudulent accounting?
A. Significant operations located in foreign countries where cultures and business practices are different
B. Management's continued use of materiality to justify marginal or inappropriate accounting
C. A strained relationship between management and the current or previous auditor
Explanation: This factor is related to opportunities.

User Contributed Comments 7

User Comment
shiva5555 Overseas operations can be an opportunity as well.
Thecatz I agree, but is it true?
chuxiu Is a strained relationship a good sign that there is no fraudulent accounting? that the auditor wants to do the right thing while mngt opposes?
CJPerugini Let me ask you this, whose balls are you more likely to bust for doing something they're not supposed to, your friend or your enemy? C.
ascruggs92 How is C a rationalization in anyway? If you have a bad relationship with your auditors, wouldn't they be more inclined to screw you over for perceived fraud? I don't understand the logic of "We don't like our auditors, so let's commit fraud just to give them the finger" that this seems to imply
cfastudypl option A is quite correct as what is involved with financial statements from different countries is translations (not to forget IAS 21 guidance) and alignment/aggregation of figures which are straight forward without having to change the financial statements themselves.
rajesh9414 I guess C should be the answer, as a strained relationship bw the mangment and auditor will decrease the chances of fraud via bribery ,etc.
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