Unreasonable compensation issues are more likely to arise in audits of privately held corporations rather than publicly traded corporations.

Question

Quizplus · Accepted Answer

Unreasonable compensation issues are more likely to arise in audits of privately held corporations because they are not subject to the same level of scrutiny and disclosure requirements as publicly traded corporations, making it easier for insiders to set their own compensation at an unreasonable level. Publicly traded corporations, on the other hand, are required to disclose executive compensation and are subject to greater oversight by regulatory authorities and shareholders, making it more difficult for executives to set their own compensation at an unreasonable level without attracting attention and scrutiny.

Unreasonable Compensation Issues Are More Likely to Arise in Audits