The following characteristic(s) is(are) prevalent in most frauds:
A) The company CEO was the perpetrator
B) The last audit report was a qualified audit opinion
C) The company is listed on the New York Stock Exchange
D) The officers held incompatible positions (CEO and CFO)
E) All of the above

Question

Quizplus · Accepted Answer

A: A is correct.
B: incorrect because in a recent study, 55% of the fraud cases had audit reports prior to the fraud that were unqualified. Therefore, if anything, most frauds have unqualified reports prior to their discovery.
C: incorrect because a study found that only 15% of the fraudulent companies were traded on the New York Stock Exchange whereas 78% were on the NASDAQ or other over-the-counter markets. Most of the companies that are fraudulent are not listed on the NYSE.
D: incorrect because about 20% of recently studied fraudulent companies had officers with incompatible job functions. This percentage is definitely not considered most of the frauds.
E: incorrect because out of the listed answers, only A is correct, not all of the above.

The Following Characteristic(s) Is(are) Prevalent in Most Frauds