Financial statement manipulation risk is arguably present for all companies' financial statements. However, the risk is elevated for companies that:
A) are heavily regulated.
B) have foreign subsidiaries.
C) have to make significant judgments for accounting estimates.
D) operate in stable economic environments.

Question

Quizplus · Accepted Answer

Companies that have to make significant judgments for accounting estimates have a higher risk of financial statement manipulation as these judgments involve subjectivity and can be easily manipulated. The other options do not necessarily have a direct correlation with financial statement manipulation risk.

Financial Statement Manipulation Risk Is Arguably Present for All Companies