Options:

Select an item:

1-Observe inventory counts at all warehouse locatins on the same day

2-Conduct inventory counts at the end of the reporting perios

3-Request to examine inventory boxes on the day of the inventory count

4-Analyze inventory turnover ratio

5-Review prices of similar products

6-Vouch a sample of items from the inventory report sheet to the corresponding prenumberes inventory tags

7-Examine vendor invoices to determine whether inventory is valued correctly

8-Review disbursements and agree to the related support (i.e Invoice, timecard)

9-Verify that the appropriate cost method is disclose (i.e FIFO, LIFO)

10-Trace the inventory amount on the general ledger to the trial balance

11-Observe distribution of paychecks

12-Verify that timecards are approved

13-Review personnel file and recalculate salary amount based on time.

14-Trace the disbursement check amount to the payroll expense file

15-Inspect sales contracts to determine wheter the customer has rights to return the merchandise

16-Trace a sample of shipping documents to corresponding sales invoices, and to the sales journal and accounts receivable ledger

17-Vouch the sales journal to a sample of shipping documents

18-Not Applicable

Type of fraud

1-Fraudulent Financial reporting

2-Misappropriation of assets

3-Not applicable

Fraud Factor

1-Incentive/pressure

2-Opportunities

3-Aatitudes/rationalization

4-Not applicable

The year under audit is Year 4. For each independent situation below, double-click on the associated shaded cell and select from the list provided the type of fraud, fraud factor, and appropriate audit procedure to detect misstatement due to fraud. A selection may be used once, more than once, or not at all. If there is no fraud committed, select Not Applicable for type of fraud, fraud factor, and appropriate audit procedure to detect misstatement due to fraud. Fraud Incident Fraud Factor Type of fraud Audit procedure to Detect misstatement due to Fraud berryphones produces two products: cell phone and computer tablets. Berryphone utilizes expensive quality materials to create the Redberry. In addition, Redberry pays top wages for its workforce to assemble the cell phone. As a result, in year 1 and year 2, berryphones dominated the market in cell phones and had substantial profits related to its redberry phone, which offered exceptional quality and several unique features that were not offered by any other cell phones. The redberry phone accounted fo 70% of revenue in year 1 and year 2. On January 1, Year 3, a new product released by a competitor, Strawberryphone, made their most popular model of cell phones, Redberry phones, obsolete. Management is about to release their annual results for the year ended December 31, Year 3 and has decided to ignore any of the competition's effect on their inventory. Management has not recorded any fictitious sales