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During the audit of Easy Company, a national distributor of paper products, Longleaf CPAs are performing audit procedures related to accounts payable. Specifically, the audit
During the audit of Easy Company, a national distributor of paper products, Longleaf CPAs are performing audit procedures related to accounts payable. Specifically, the audit manager with daytoday responsibility for the audit has requested two audit staff associates perform a procedure whereby the file containing the client's vendor addresses is matched against the file containing the client's employee addresses. Once the check is complete, three matches are noted, all pertaining to longtime employees of the client in fairly senior positions. What would be the most appropriate response to this finding?
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The auditors should refer this finding to the client's internal audit function, as this function is more familiar with both the client and the staff working for the client. If there is any fraud, it is thus more likely that the internal auditors will locate it
The auditor should contact the employees individually and separately and interview them pertaining to why these addresses match. Upon conclusion of the interview, the employees should be requested to provide written assurances that the address matches are simply errors in the system, and that the employees are not also vendors of the client.
The auditors should contact the respective employees' supervisors, and alert them of the finding. The auditor should also separately institute inquiries to determine if the employees are also receiving payments from the client, and if so if these payments are legitimate.
The auditor should assume, based on the longevity and seniority of these employees, that this is just an error. Consequently, it should simply be noted and documented in the file.
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