CFE – Financial Transactions and Fraud Schemes — Question 101

Which of the following statements regarding financial statement disclosures is FALSE?

Answer options

• A. There is nothing inherently wrong with related-party transactions, as long as they are fully disclosed.
• B. Management must disclose potential losses from ongoing litigation if the related liability is highly likely.
• C. All information relating to the company must be disclosed in the financial statements, regardless of materiality.
• D. Events occurring after the close of the reporting period that could have a significant effect on the company’s financial position must be disclosed.

Correct answer: C

Explanation

Option C is incorrect because disclosures in financial statements should only include information that is material to the users of the financial statements. The other options (A, B, and D) are accurate statements regarding financial disclosures and compliance with accounting standards.