Management of Premium Discovery Company is compensated through large salaries, stock options and bonuses tied to the company's working capital growth. The CEO is constantly holding meetings to ensure that management is on target for increased operating income each month. Based upon the above information only, what type of probable motivation is there to commit fraud at the Premium Discovery Company?

Question

Quizplus · Accepted Answer

The large salaries, stock options, and bonuses tied to the company's working capital growth provide a strong incentive for management to commit fraud to artificially boost the company's financial performance and increase their compensation.

Management of Premium Discovery Company Is Compensated Through Large Salaries