Which of the Following Is an Acceptable Response to Fraud

question 34

Multiple Choice

Which of the following is an acceptable response to fraud risks related to sales that were identified in an audit?

• A)Exercise professional skepticism when performing sales testing.
• B)Increase the assessment of control risk for sales.
• C)Increase the assessment of detection risk for sales.
• D)Perform additional substantive sales procedures on a surprise basis.

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Definitions:

Fixed Overhead Volume Variance

The difference between the budgeted fixed overhead and the actual fixed overhead incurred, due to changes in production volume.

Standard Cost

A predetermined cost of manufacturing an item, including direct materials, labor, and overheads, used for budgeting and performance evaluation.

Overhead Cost Performance Report

A document that compares the actual overhead costs incurred to the budgeted or standard overhead costs, for the purpose of monitoring and controlling these costs.

Efficiency Variances

Variances that occur when the actual performance deviates from the expected standards, often analyzed in terms of time, cost, and materials.