Question

Which relationship might suggest a heightened risk of fraud in the acquisition and payment cycle? a. Unexpected increases in the number of suppliers. b. Sales expenses growing in proportion to sales revenue. c. A reduction in raw material costs. d. Maturing capital assets with no plan for rep

Answer 1

Answer:

The correct answer is letter "A": Unexpected increases in the number of suppliers.

Explanation:

Frauds or money cleansing usually requires the help of a network of different business interconnected to clear the illegal funds with the excuse of having made commercial activities that never took place. In most cases, accounting documents are faked so that the proceeds of the questionable funds may seem as legal as possible.

In that case, if a company counts with more suppliers and fraud is taking place in the organization, they will have the excuse of making more payments so more funds can go out of the company.