Which of the Following Pieces of Information Discovered by an Auditor

question 29

Multiple Choice

Which of the following pieces of information discovered by an auditor when performing substantive tests of account balances would most likely raise red flags about the possible existence of material fraudulent financial reporting?

• A) Paper copies of paid invoices and cancelled checks were microfiched and then destroyed.
• B) The controller requires that you schedule any audit inquiries daily after lunch, not in the morning.
• C) The petty cash fund custodian never takes a vacation.
• D) The client's estimate of the allowance for doubtful accounts is lower than the auditor's independent evaluation of the allowance.

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Definitions:

List Price

The manufacturer's suggested retail price (MSRP) that is intended to be the starting point for negotiations between buyers and sellers.

Jobber

A wholesaler who buys goods from manufacturers and sells them to retailers; also known as a wholesale merchant or distributor.

Trade Discounts

Price reductions granted by suppliers to buyers in the trade channel, often based on volume purchased or to promote certain behaviors.

Channel

A medium through which a product or service is distributed to its end-users, such as a retail store or online platform.