Question: For each of the following red flags, identify whichfraud exposure the risk falls under: management anddirectors(MA), relationships with others, organization andindustry, or financial results and operatingcharacteristics.
1. The personal worth of directors is tied up in theorganization.
2. The company has a complex organizationalstructure.
3. The audit committee rarely holds a meeting.
4. The company has recently switched to a new lawfirm.
5. Although sales appear to be increasing, the costof goods sold and inventory levels remainconstant.
6. The company is about to go through a debtoffering.
7. A background check indicates that the new controllerhas been fired from five previous jobs.