An Internal Auditor Is Reviewing the Accounts Receivable When She

question 67

Multiple Choice

An internal auditor is reviewing the accounts receivable when she discovers account balances more than three years old. The auditor was previously supervising the area during this time, and she subsequently advises the chief audit executive (CAE) of a potential conflict. Which of the following is the most appropriate course of action for the CAE to take?

• A) Replace the auditor with another audit staff member.
• B) Continue with the present auditor, as more than one year has passed.
• C) Withdraw the audit team and outsource the financial audit of the division.
• D) Work with the division's management to resolve the situation.

---

Definitions:

Cash

Represents money or its equivalents (such as checks) that a company possesses and can use for transactions.

Withdrawals

Money or assets taken from a business by its owner(s) for personal use, typically reducing the total equity.

Cash

Liquid currency and assets readily convertible to currency, used by businesses to conduct transactions.

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the owners' claim on the business assets.