A Proactive Computer Audit Test to Detect When a Company

question 5

Multiple Choice

A proactive computer audit test to detect when a company has over-purchased inventory, which could be a sign of a purchasing manager who may be receiving illegal gratuities from a supplier would not include:

• A) Calculate inventory turnover by individual item
• B) Examine individual inventory items for potential obsolescence
• C) Calculate receivables turnover by customer
• D) Extract all part greater than zero in cost that have had usage in the current year

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Definitions:

Payback Period

The length of time required to recover the cost of an investment.

Required Rate

The minimum expected rate of return on an investment, project, or loan, often used in evaluating its viability.

Net Operating Income

A measure of a company's profitability from its core business operations, calculated by subtracting operating expenses from revenue, excluding non-operating items such as interest and taxes.

Payback Period

The length of time it takes to recover the initial investment in a project, often used to assess the risk of investments.