Examining a company's relationships with other individuals and entities can reveal important information about financial statement fraud. Identify the piece of information that is CORRECTLY linked to its source.
A) Examining relationships with financial institutions will show whether there has been significant "short selling" of the company's stock.
B) Examining relationships with related parties will show whether there are unusual transactions that significantly improve the company's reported financial performance.
C) Examining a company's relationships with its lawyers will show whether management is able to unduly influence the selection of accounting principles and the determination of significant estimates.
D) Examining relationships with regulatory bodies will show whether the company has recently changed legal counsel.

Question

Quizplus · Accepted Answer

A: This information would come from examining a company's relationships with its investors.
C: This information would be revealed by examining the scope of influence of management and the board of directors and not by examining a company's relationships with financial institutions.
D: This information comes from investigating a company's relationship with its lawyers.

Examining a Company's Relationships with Other Individuals and Entities Can