All of the following are ways to detect disclosure fraud except:
A) A tip or a complaint
B) Making inquiries of management regarding related-party transactions, and other liabilities
C) Identifying inconsistencies between disclosures and information in the financials
D) Searching for analytical symptoms in the financial statements

Question

Quizplus · Accepted Answer

A: A is incorrect because disclosure frauds are harder to find than other frauds. In fact, without a tip or complaint, it is difficult to know that disclosure fraud is even occurring.
B: B is incorrect because making inquiries is a way to detect disclosure fraud. Even though some of these inquiries may be routine or involve basic questions, differences in responses may tip you off that management is engaging in fraudulent activities.
C: C is incorrect because identifying these inconsistencies is a way to detect disclosure fraud.
D: D is correct.

All of the Following Are Ways to Detect Disclosure Fraud