During the planning stage of an assurance engagement, the engagement supervisor initially reviews the control...

Unattainable business targets are a classic fraud-risk red flag because they can create excessive pressure on employees or management to manipulate results, conceal poor performance, or bypass controls. Fraud risk assessment considers incentives and pressures, opportunities, and rationalizations, together with the organization’s ethical culture and control environment. Reinforcing the code of ethics and reiterating the whistleblowing policy are positive control-environment signals rather than warning signs. A missing succession plan may create governance or continuity risk, but it is not as directly associated with fraud pressure. The IIA’s fraud guidance emphasizes evaluating culture, incentives, and conditions that may increase the likelihood of fraudulent behavior. Therefore, senior management setting unattainable targets is the strongest potential fraud red flag in this scenario.