Some of the factors believed to be perused in an economic-reality audit include the following:
A) Significant increases in interest, dividend, and other investment income.
B) Significant decreases in mortgage and other reportable interest paid.
C) Significant variance in self-employment or farming income during the period relative to industry norms.
D) All of the above.

Question

Quizplus · Accepted Answer

All of the factors listed (significant increases in investment income, significant decreases in reportable interest paid, significant variance in self-employment/farming income) can be indicators of potential fraud or misstatement of financials. Therefore, all of them should be considered in an economic-reality audit.

Some of the Factors Believed to Be Perused in an Economic-Reality