Fraudulent financial reporting is a business reality. While it cannot be eliminated, the risk of fraudulent reporting can be decreased. Which of the following considerations is least likely to lessen that risk?
A) an independent audit committee
B) an internal audit function
C) vigilant management
D) an increased focus on tying bonuses to short-term company performance

Question

Quizplus · Accepted Answer

Tying bonuses to short-term company performance may actually increase the risk of fraudulent reporting, as management may be more inclined to manipulate financial statements to meet those targets. The other options (an independent audit committee, an internal audit function, and vigilant management) all contribute to decreasing the risk of fraudulent reporting.

Fraudulent Financial Reporting Is a Business Reality