An important consideration in assessing inherent risk for purchase transactions is any motivation management may have to misstate expenditure. Which of the following is not a factor that may contribute to misstatement?
A) the need to achieve announced profitability targets.
B) the need to disclose concern over control problems.
C) temptations for employees to make unauthorised purchases.
D) temptations for employees to misappropriate purchased assets.

Question

Quizplus · Accepted Answer

The need to disclose concern over control problems is not a factor that may contribute to misstatement of expenditure. It is more related to transparency and governance rather than a motivation to misstate financial records.

An Important Consideration in Assessing Inherent Risk for Purchase Transactions