(Bonus) Identify the true statement about detecting fraud using financial statement reports.
1) Small frauds may not affect the summarized financial statements significantly enough to be detected.
2) Before performing any data-driven analysis that targets fraud and corruption in financial statements, the numbers in all three types of financial statements need to be converted to percentages.
3) Vertical analysis is the most direct method of focusing on changes from period to period.
4) Performing horizontal analysis requires converting the income statement balances into percentages of gross sales.