Fraud risk factors are examples of factors that increase the risk of fraud.Which of the following is an example of a management "opportunities" risk factor?
A)The company has lost a major account and income is falling.
B)Two major competitors have gone bankrupt as margins decline in the industry.
C)The Chief Executive Officer owns forty percent of the outstanding share capital.
D)New accounting standards provide three different methods for valuing financial instruments.

Question

Quizplus · Accepted Answer

Opportunities for fraud increase when there are complex or new accounting standards that can be manipulated. Choice D, which mentions new accounting standards providing different methods for valuing financial instruments, represents an opportunity for management to manipulate financial results, thus increasing the risk of fraud.

Fraud Risk Factors Are Examples of Factors That Increase the Risk