According to professional auditing standards,which of the following best represents a type of financial reporting fraud that might occur?
A) Management accrues a liability and discloses the possible outcome of a lawsuit prior to settling the matter.
B) Management reclassifies a negative cash balance by increasing cash and also increasing a current liability.
C) Management discloses its failure to meet loan covenants but states that a waiver has been received.
D) Management intentionally excludes a material subsidiary from its consolidated results that it controls significantly.
Correct Answer:
Verified
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