Mechanisms That Discipline Financial Reporting Quality

Which of the following would _least likely_ discourage a US company from issuing financial reports with misleading segment data?

Correct. The possibility of investigation by the FASB would not discourage misleading financial reporting since the FASB sets standards but does not enforce them.

Incorrect. The possibility of investigation by the SEC would discourage misleading financial reporting since they are responsible for enforcing reporting requirements.

Incorrect. The possibility of exceptions in the audit report would discourage misleading financial reporting since exceptions are viewed negatively.

The possibility of investigation by the FASB

The possibility of investigation by the SEC

The possibility of exceptions in the audit report