Which of the following would most likely be deemed a direct- effect illegal act?

Question

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A direct-effect illegal act refers to violations that have a direct and material effect on the financial statements. Violation of corporate tax laws directly affects the financial statements through misrepresentation of tax liabilities and expenses, making it a direct-effect illegal act. Violations of health and safety laws, environmental regulations, and employment laws, while serious, typically have an indirect effect on the financial statements.

Which of the Following Would Most Likely Be Deemed a Direct-