An Internal Auditor Plans to Use an Analytical Review to Verify

question 407

Multiple Choice

An internal auditor plans to use an analytical review to verify the correctness of various operating expenses in a division. The use of an analytical review as a verification technique would not be a preferred approach if.

• A) The auditor notes strong indicators of a specific fraud involving this account.
• B) The company has relatively stable operations which have not changed much over the past year.
• C) The auditor would like to identify large, unusual, or non-recurring transactions during the year.
• D) The operating expenses vary in relation to other operating expenses, but not in relation to revenue.

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Definitions:

Money Supply

The complete collection of monetary funds in an economy, including cash, coins, and the balances in checking and savings accounts, at a given moment.

Gold Coins

Coins made primarily or entirely of gold and used historically as currency, and today often collected as investments or keepsakes.

Small Denomination Time Deposits

Fixed-term deposit accounts offered by banks that have a lower minimum deposit requirement and are usually associated with lower interest rates.

Large Denomination Time Deposits

Savings accounts or certificates of deposit in large amounts, usually over $100,000, that earn interest over a fixed period of time.