Management's attitude toward aggressive financial statement reporting and its emphasis on meeting projected profit numbers would significantly influence an entity's control environment when
A) Internal auditors report to the audit committee
B) The audit committee is active in overseeing the entity's financial reporting
C) Management is dominated by one shareholder with little other governance
D) Management does not have a stock option plan

Question

Quizplus · Accepted Answer

When management is dominated by one shareholder with little other governance, there is a higher risk of aggressive financial reporting due to lack of checks and balances, significantly influencing the control environment.

Management's Attitude Toward Aggressive Financial Statement Reporting and Its Emphasis