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Basic Question 5 of 11

Which of the following factors are related to rationalizations?

I. Significant estimates and subjective judgment in accounting for assets, liabilities, revenues and expenses
II. Management's excessive interest in maintaining or increasing a firm's stock price
III. Management failing to correct known reportable conditions on a timely basis
IV. Employing inappropriate means to minimize earnings for tax purposes
V. Failure to effectively communicate a firm's ethical standards

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Lina

Lina

Learning Outcome Statements

describe motivations that might cause management to issue financial reports that are not high quality and conditions that are conducive to issuing low-quality, or even fraudulent, financial reports

describe mechanisms that discipline financial reporting quality and the potential limitations of those mechanisms

CFA® 2025 Level I Curriculum, Volume 3, Module 10.