When Testing for Fraudulent Hours or Fraudulent Expense Reports

question 96

Multiple Choice

When testing for fraudulent hours or fraudulent expense reports

• A)it is easy for the auditor to discover fraudulent hours because of the abundance of available evidence.
• B)it is difficult to prevent fraud in these two areas with adequate internal controls.
• C)management falsification of expense reports can be an indicator of disregard for internal controls and the potential for fraud in other areas.
• D)examining payroll records for approval is an important substantive tests of transactions to uncover fraudulent hours.

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Definitions:

Lower Of Cost

An accounting principle that valuates inventory at the lower amount between its original cost and current market value.

Market

A venue where buyers and sellers engage in the trade of goods, services, or securities, affecting prices through supply and demand dynamics.

FIFO Method

The FIFO (First-In, First-Out) method is an inventory valuation strategy where the costs of the oldest inventory items are assigned to the cost of goods sold first.

Inventory Item

An item stored within a company's inventory that is ready or will be ready for sale, including raw materials, work-in-progress, and finished goods.