Which of the following statements is true?
a. Most financial statement frauds occur in large historically profitable companies.
b. Most people who commit management fraud are first-time offenders.
c. An active board of directors or audit committee does little to deter fraud.
d. Perpetrating fraud is much easier in an organization with democratic leadership, where the decision making is spread among several individuals.
b
FEEDBACK: a. Incorrect. They occur in smaller organizations where one or two individuals have almost total decision-making ability.
b. Correct.
c. Incorrect. An active board of directors and/or audit committee that gets involved in the major decisions of the organization can do much to deter management fraud.
d. Incorrect. Perpetrating fraud is much easier when one or two individuals have primary decision-making power than when an organization has a more democratic leadership.
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