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In planning and performing an audit, auditors are concerned about risk factors for two distinct types of fraud: fraudulent financial reporting and misappropriation of assets.

In planning and performing an audit, auditors are concerned about risk factors for two distinct types of fraud: fraudulent financial reporting and misappropriation of assets. Which of the following is a risk factor for misappropriation of assets? Generous performance-based compensation systems. Management preoccupation with increased financial performance. An unreliable accounting system. Strained relationships between management and the auditors.

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