Problem 7-20 During audit planning, an auditor obtained the following information: 1. Significant operations are located and conducted across international borders in jurisdictions where differing business environments and cultures exist. 2. There are recurring attempts by management to justify marginal or inappropriate accounting on the basis of materiality. 3. The company's controller works very hard, including evenings and weekends, and has not taken a vacation in two years. 4. The company's board of directors includes a majority of directors who are independent of management. 5. Assets and revenues are based on significant estimates that involve subjective judgments and uncertainties that are hard to corroborate. 6. The company is marginally able to meet exchange listing and debt covenant requirements. 7. The company's financial performance is threatened by a high degree of competition and market saturation. 8. New accounting pronouncements have resulted in explanatory paragraphs for consistency for the company and other firms in the industry. 9. The company has experienced low tumover in management and its internal audit function. REQUIRED 1. Indicate whether the information indicates an increased risk of fraud. 2. If the information indicates an increased risk of fraud, indicate which fraud condition (incentives/pressures, opportunities, or attitudes/rationalization) is indicated.