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HP2-H73 - Selling HP Healthcare Solutions 2018 (Germany)

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NEW QUESTION: 1
Management's attitude toward aggressive financial reporting and its emphasis on meeting projected profit
goals most likely would significantly influence an entity's control environment when:
A. Those charged with governance are active in overseeing the entity's financial reporting policies.
B. Internal auditors have direct access to the board of directors and the entity's management.
C. External policies established by parties outside the entity affect its accounting practices.
D. Management is dominated by one individual who is also a shareholder.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
Choice "B" is correct. When management is dominated by one individual who is also a shareholder, there
may be an opportunity for management to override control procedures.
Choice "A" is incorrect. Influence of external parties serves an oversight role that strengthens the control
environment and minimizes the effect of management's attitude.
Choice "C" is incorrect. Existence of internal auditors with direct access to the board of directors
strengthens the control environment and lessens the effect of management's attitude.
Choice "D" is incorrect. Active participation of those charged with governance serves an oversight role that
strengthens the control environment and lessens the effect of management's attitude.


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