Certified Fraud Examiner (CFE) — Question 28

Which of the following is NOT the reason why senior management will overstate business statement?

Answer options

• A. Comply with debit covenants
• B. Meet personal performance criteria
• C. Trigger performance related compensation
• D. Show a pattern of growth to support sale of a business

Correct answer: A

Explanation

The correct answer is A, as complying with debit covenants typically requires accurate reporting rather than overstating. The other options indicate motivations where management might inflate numbers to enhance personal gain or business attractiveness.