Question

select all that apply which financial or profitability risk factors might motivate fraud? (check all that apply.) multiple select question. recurring operating losses unclear accounting or regulatory requirements inability to generate cash flows estimates and judgments are made in the financial statements

Answer 1

Financial or profitability risk factors that might motivate fraud include recurring operating losses, unclear accounting or regulatory requirements, inability to generate cash flows, and estimates and judgments in financial statements.

Step-by-step explanation:

Financial or profitability risk factors that might motivate fraud include:

• Recurring operating losses: A company facing consistent financial losses might be tempted to engage in fraudulent activities to improve its financial position.
• Unclear accounting or regulatory requirements: Lack of clarity in accounting or regulatory guidelines can create opportunities for fraudulent manipulation of financial records.
• Inability to generate cash flows: Difficulty in generating cash flows can lead to financial distress, potentially prompting fraudulent activities to conceal the true financial condition of the company.
• Estimates and judgments in financial statements: Subjective estimates and judgments in financial statements can be manipulated to misrepresent the true financial performance of a company.