Capitalizing Items That Are Not Fixed Assets May Result in Inflated

Multiple Choice

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

A) Expand the list of bidders to make it more difficult for bidders to collude.
B) Ensure regular management review of fixed asset accounting transactions and trends in fixed asset ratios.
C) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.