An Organization's Policies Allow Buyers to Authorize Expenditures Up to $50,000

question 184

Multiple Choice

An organization's policies allow buyers to authorize expenditures up to $50,000 without any other approval. Which of the following audit procedures would be most effective in determining if fraud in the form of payments to fictitious companies has occurred?

• A) Use generalized audit software to list all purchases over $50,000 to determine whether they were properly approved.
• B) Develop a snapshot technique to trace all transactions by suspected buyers.
• C) Use generalized audit software to take a random sample of all expenditures under $50,000 to determine whether they were properly approved.
• D) Use generalized audit software to select a sample of paid invoices to new vendors and examine evidence that shows that services or goods were received.

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Definitions:

Budget Deficit

The financial situation where a government's expenditures exceed its revenues within a specified period, leading to borrowing or debt accumulation.

Capital Goods

Long-lasting goods that are used in the production of other goods and services and are not consumed in the immediate process of production.

Stock Of Money

The total amount of monetary assets available in an economy at a specific time, including cash, bank deposits, and liquid financial assets.

Balance Of Trade

The difference in value between a country's imports and exports over a certain period.