Which of the Following Information That Comes to an Auditor's

question 37

Multiple Choice

Which of the following information that comes to an auditor's attention most likely would raise a question about the occurrence of illegal acts?

• A)The exchange of property for similar property in a nonmonetary transaction.
• B)The discovery of unexplained payments made to government employees.
• C)The presence of several difficult-to-audit transactions affecting expense accounts.
• D)The failure to develop adequate procedures that detect unauthorized purchases.

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Definitions:

Abnormal Earnings

Earnings that are above or below the normal or expected level due to unusual circumstances or events.

Actual Earnings

The real profits generated by a company within a specific period, usually reported quarterly or annually.

Earnings Quality

An assessment metric that evaluates the degree to which a company's earnings are derived from sustainable sources and are repeatable, controllable, and bankable.

Multi-Step Income

Multi-step income statements provide a detailed breakdown of revenues, expenses, and profit, distinguishing between operating and non-operating activities.