Graded Audit Task #2 Identify if the scenario is an associated condition generally present when fraud occurs, be it opportunities, incentives/pressures, or attitudes/rationalizations. In addition, note if the fraud risk factor relates to misstatements arising from fraudulent financial reporting or fraud risk factors relating to misstatements arising from misappropriation of assets. 1 Scenarios Factor Significant related-party transactions not in the 2 ordinary course of business 3 Promotions, compensation, or other rewards inconsistent with expectations Significant bank accounts in tax-haven jurisdictions for which there appears to be no clear business justification 4 5 Large amounts of cash on hand or processed 6 N Ineffective board of directors or audit committee oversight over internal control Inadequate physical safeguards over cash, investments, or inventory New accounting, statutory, or regulatory requirements Excessive interest by management in maintaining or increasing the entity's stock price Management has significant financial interests in 10 the entity 8 9 B Inadequate monitoring of controls, including 11 automated controls and controls over interim financial reporting 12 Management failing to correct known significant deficiencies on a timely basis