Phillips CPA Firm is auditing the accounts of Tojo Enterprises, Inc., a national distributorof kitchen appliances. After reviewing the minutes of board of directors meetings as wellas recent SEC filings, Phillips CPA firm have noted that key executives are extremelyclose to achieving a substantial bonus if the firm's stock price achieves a certain level inthe market. Based on this finding, what might Phillips CPA Firm decide to do?O Phillips CPA Firm are likely to audit competing companies within the sameindustry as a basis for comparison.O Phillips CPA Firm are likely to assess control risk as low on the premise thatmanagement's desire to achieve stock price forecasts will increase fraud risk.O Phillips CPA Firm are likely to assume fraud risk is high, due to seniormanagement's proximity to achieving certain desired stock prices.O None of these answer choices are correct.

The possibility that fraudulent acts, such as deliberate misrepresentation, deception, or…

Phillips CPA Firm is auditing the accounts of Tojo Enterprises, Inc., a national distributor of kitchen appliances. After reviewing the minutes of board of directors meetings as well as recent SEC filings, Phillips CPA firm have noted that key executives are extremely close to achieving a substantial bonus if the firm's stock price achieves a certain level in the market. Based on this finding, what might Phillips CPA Firm decide to do? Phillips CPA Firm are likely to audit competing companies within the same industry as a basis for comparison. O Phillips CPA Firm are likely to assess control risk as low on the premise that management's desire to achieve stock price forecasts will increase fraud risk. O Phillips CPA Firm are likely to assume fraud risk is high, due to senior management's proximity to achieving certain desired stock prices. O None of these answer choices are correct.

Phillips CPA Firm is auditing the accounts of Tojo Enterprises, Inc., a national distributor of kitchen appliances. After reviewing the minutes of board of directors meetings as well as recent SEC filings, Phillips CPA firm have noted that key executives are extremely close to achieving a substantial bonus if the firm's stock price achieves a certain level in the market. Based on this finding, what might Phillips CPA Firm decide to do? Phillips CPA Firm are likely to audit competing companies within the same industry as a basis for comparison. O Phillips CPA Firm are likely to assess control risk as low on the premise that management's desire to achieve stock price forecasts will increase fraud risk. O Phillips CPA Firm are likely to assume fraud risk is high, due to senior management's proximity to achieving certain desired stock prices. O None of these answer choices are correct.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Phillips CPA Firm is auditing the accounts of Tojo Enterprises, Inc., a national distributor
of kitchen appliances. After reviewing the minutes of board of directors meetings as well
as recent SEC filings, Phillips CPA firm have noted that key executives are extremely
close to achieving a substantial bonus if the firm's stock price achieves a certain level in
the market. Based on this finding, what might Phillips CPA Firm decide to do?
O Phillips CPA Firm are likely to audit competing companies within the same
industry as a basis for comparison.
O Phillips CPA Firm are likely to assess control risk as low on the premise that
management's desire to achieve stock price forecasts will increase fraud risk.
O Phillips CPA Firm are likely to assume fraud risk is high, due to senior
management's proximity to achieving certain desired stock prices.
O None of these answer choices are correct.

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