Senior managers of Mega Corp.are entitled to receive large bonuses if they achieve earnings targets.What is the effect of this on the risks associated with recording of revenue?
A)It increases fraud risks associated with revenue.
B)It decreases fraud risks associated with revenue.
C)It increases detection risks associated with revenue.
D)It decreases control risks associated with revenue.

Question

Quizplus · Accepted Answer

When senior managers are incentivized with large bonuses based on the achievement of earnings targets, it increases the pressure on them to meet or exceed those targets, which could lead to manipulation or falsification of revenue figures. This increases the fraud risks associated with revenue recording.

Senior Managers of Mega Corp