Which characteristic would concern an auditor about the risk of material misstatements arising from fraudulent financial reporting?

1.  limited employee turnover within the accounting and finance department
2.  management’s disregard of regulations and regulatory authorities
3.  regularly reported bank reconciliations, including deposits in transit
4.  capital assets sold at a loss before being depreciated fully

Correct Answer:

•  management’s disregard of regulations and regulatory authorities

[source] ‘MT: regular bank recons and loyal employees are +ve. Nothing wrong with assets sold at lost before fully depreciated, like you can sell a plane at a loss even before it has been “fully used”.