According to professional auditing standards, which of the following best represents a type of fraudulent financial reporting?
a. Management accrues a liability and discloses the possible outcome of a lawsuit prior to settling the matter.
b. Management reclassifies a negative cash balance by decreasing cash and increasing a current liability.
c. Management discloses its failure to meet loan covenants but states that a waiver has been received.
d. Management intentionally excludes a subsidiary from its consolidated results that it controls significantly.
d
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