When dealing with fraudulent financial reporting risk for accounts payable,
A) companies will generally tend to overstate accounts payable.
B) it is difficult for the auditor to verify if all liabilities have been recorded if prenumbered receiving reports are used.
C) companies have used fictitious reductions to accounts payable to overstate net income.
D) accounts payable is rarely a significant risk area for fraudulent financial reporting.

Question

Quizplus · Accepted Answer

Companies have been known to use fictitious reductions to accounts payable to overstate net income. This is a common method of fraudulent financial reporting in the accounts payable area.

When Dealing with Fraudulent Financial Reporting Risk for Accounts Payable