All of the following represent an increased opportunity for management to commit fraud except:
A) Significant related party transactions.
B) The auditor's relationship with management is strained.
C) Management is dominated by a single person.
D) The financial statements included highly subjective estimates.

Question

Quizplus · Accepted Answer

A strained relationship between the auditor and management would actually decrease the opportunity for management to commit fraud, as the auditor would be more likely to detect any fraudulent activity. The other options (A, C, and D) all create an increased opportunity for management to commit fraud as they involve situations where management has more control and discretion over financial reporting.

All of the Following Represent an Increased Opportunity for Management