Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assessing Fraud Risk and Audit Procedures to Follow Up. The following situations may raise a suspicion of fraud on an audit engagement. Explain how each

Assessing Fraud Risk and Audit Procedures to Follow Up. The following situations may raise a suspicion of fraud on an audit engagement.

Explain how each situation could indicate a fraud risk and how the auditor could confirm or dispel it.

a. An employee can authorize medical insurance claims and enter them into the system for payment without supervisory review. What might happen?

b. The inventory warehouse manager was also responsible for making the physical inventory observation and reconciling discrepancies to the perpetual inventory records. What might happen?

c. The petty cash custodian was replaced and the frequency of fund reimbursement decreased from every two days to every four days. What might you suspect?

d. Both sales and income may have been overstated by recording a false cash sale at the end of the year. What dangling debit might give the scheme away?

e. A company may have recorded fictitious sales. What account could you audit to determine whether this has happened?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance And Control For Construction

Authors: Chris March

1st Edition

0415371155, 978-0415371155

More Books

Students also viewed these Finance questions