Question

Module 5:D C. Failure to record emnl D. Failure to record me to record employee payroll earned but not paid as of period end e to record warranty costs when the facts suggest that Esclosure is more appropriate accounting treatment financial reporting disclosures, even when reported, which Following still requires careful examination by the antifraud 8. Related to financial re of the following professional? A. Omitted liability disclosures B. Related party transactions C. Accounting changes D. Management fraud 9. Which improper asset valuation may inflate the current ratio? A. Valuing inventory at current retail prices B. Accounting for declines in fair market value of inventory Chapter 7

Answer 1

8. Related party transactions are the transactions which require serious consideration by antifraud professional even though the related party transactions are disclosed in the financial statements, there may be a high probability of fraud existing in the related party transactions.

9. The formula for current ratio is current assets/current liabilities, inflating of the same may happen because of an increase in current assets or else decrease inthe current liabilities. Out of the given options valuing inventory at current retail prices will lead to increase in the value of the current assets, leading to inflation of current ratio.

10. establishing a whistleblower hotline and protecting them, will lead to increased occurence of frauds because it results in leak of confidential information about the company, which may encourage illegal means against the company.