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:

Celler-Kefauver Act

A United States antitrust law passed in 1950, aimed at preventing anti-competitive mergers and acquisitions by closing loopholes in the earlier Clayton Antitrust Act.

Clayton Act

A United States antitrust law enacted in 1914, aimed at promoting competition by preventing unfair business practices such as price discrimination and exclusive dealings.

Sherman Act

A landmark federal statute in the field of U.S. antitrust law aimed at prohibiting monopolistic practices and promoting competition.

Clayton Act

A U.S. antitrust law, passed in 1914, aimed at protecting trade and commerce against unlawful restraint and monopolies.