An example of an opportunity for misappropriation of assets risk factor is
A) compensation inconsistent with expectations.
B) lack of complete and timely reconciliations of assets.
C) management's practice of committing to creditors to achieve unrealistic forecasts.
D) known history of violations of laws and regulations.

Question

Quizplus · Accepted Answer

Lack of complete and timely reconciliations of assets creates an opportunity for misappropriation of assets as it leaves room for undetected errors or fraud. This means that assets could be improperly used, sold or transferred without detection, leading to significant financial loss for the company. The other answer choices are examples of different types of risk factors, but not specifically related to misappropriation of assets.

An Example of an Opportunity for Misappropriation of Assets Risk