An Auditor Receives Anonymous Information That Fraud Is Occurring in the Operation

question 344

Multiple Choice

An auditor receives anonymous information that fraud is occurring in the operation being audited, but no details are given as to the type of fraud or the individuals involved. There are several areas in which fraud could occur. The auditor should:

• A) Identify the area that has the greatest volume of transactions and design a sampling plan for substantive testing.
• B) Apply analytical procedures to areas that might be impacted by possible fraudulent activities.
• C) Interview employees to identify areas where the fraud could be occurring.
• D) Plan detailed tests of the areas that have the highest dollar amount of transactions.

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Definitions:

Biological Sex

The classification of living things, typically as male or female, based on their reproductive organs and functions assigned by chromosomal complement.

Alcohol

A psychoactive substance found in beverages such as beer, wine, and spirits, known for its mind-altering effects and potential for abuse and dependency.

Extra-chromosome Condition

A genetic disorder characterized by the presence of an additional chromosome in an individual's cells, such as Down syndrome.

Fragile X Syndrome

A genetic disorder caused by a mutation on the X chromosome, leading to intellectual disabilities, behavioral issues, and physical anomalies.