A Good Fraud Auditing Involves Four Steps

question 26

Multiple Choice

A good fraud auditing involves four steps. Which of the following is the correct sequence?

• A) Identifying fraud risk exposures; building audit programs to proactively look for symptoms and exposures; investigating fraud symptoms identified; and identifying the fraud symptoms of each exposure.
• B) Identifying fraud risk exposures; identifying the fraud symptoms of each exposure; building audit programs to proactively look for symptoms and exposures; and investigating fraud symptoms identified.
• C) Building audit programs that proactively check for symptoms and exposures; identifying fraud risk exposures; identifying the fraud symptoms of each exposure; and investigating fraud symptoms identified.
• D) Identifying the fraud symptoms of each exposure; identifying fraud risk exposures; investigating fraud symptoms identified; and building audit programs to proactively look for symptoms and exposures.

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Definitions:

Compensating Balance

A minimum account balance that a company agrees to maintain in a bank account, often to qualify for favorable terms on a loan from the bank.

Effective Rate

The interest rate on a loan or investment, adjusted for the compounding period, providing a true reflection of financial costs or returns.

Terms of Sale

The conditions under which a seller is willing to sell a product or service, including price, payment method, and delivery time.

Prompt Payment Discount

A reduction in the amount due on a bill offered by a seller to encourage early payment by the buyer.