1. Research has shown that fraud is more likely to occur in a company with assets of less than $100 million.
2. Audits by a large auditing firm are more likely to be subject to fraud.
3. Aggressive earnings management always indicates financial statement fraud.
4. Earnings smoothing is a legitimate tool available to management to equalize the income of the business from year to year.
5. According to the concept of accrual accounting, the deferral of an expense today has no effect on tomorrow’s revenues.
6. Channel stuffing usually occurs at the beginning of an accounting period.
7. Most financial statement fraud occurs through the deferral of expenses.
8. According to PCAOB standards, accountants are to keep their working papers for a minimum of five years.
9. The use of discretion in an accounting method is an abuse of discretion.