Which of the Following Pieces of Information Discovered by an Auditor

question 35

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 are microfiched and then destroyed.
• B)The controller requires that you schedule any audit inquiries for after lunch each day,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:

Bad News

Information or notifications that are unwelcome, disappointing, or detrimental to the recipient.

Reader Shock

The surprise or emotional impact experienced by readers upon encountering unexpected information or events in a text.

Direct Approach

A communication technique where the main point or important information is presented at the beginning of the message.

Apology

An expression of regret or sorrow for having done something wrong or causing inconvenience, typically seeking forgiveness.