Jose Is a Senior Auditor in Charge of Testing Controls

question 68

Essay

Jose is a senior auditor in charge of testing controls over financial reporting.
The audit procedures require that Jose "maintain professional skepticism in assessing
controls for fraud risk." In the course of his testing, Jose finds a transaction that
occurred on January 5 at 11:30 P.M. that decreased the bad debts reserve account
enough to increase earnings per share to $.20, which met analysts' predictions. Jose
has a bad feeling about this transaction. For documentation purposes, he must articulate
the red flags for fraud risk for this transaction.
Required:
(a)What are the red flags for fraud risk demonstrated by this transaction?
(b) For each red flag state (a) why it is important, in other words what it suggests to
the auditor and (b) the follow-up procedure that Jose might use.

Identify the factors influencing investment according to Keynes.

Explain the impact of fiscal policy on recovering from economic downturns.

Understand the reasons behind the downward slope of the aggregate demand curve.

Comprehend the relationship between savings, investment, and the interest rate.

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Definitions:

Economic Approaches

The various theories and methods used to analyze and understand the economy, markets, and consumer behavior.

Organizational Development

An area dedicated to advancing people's capabilities and results in executing successful changes and achieving better performance within organizations, encompassing research, theory, and hands-on practices.

Change Approaches

Strategies or methods implemented to manage, facilitate, and promote adaptation to new conditions, processes, or environments within organizations.

Promoting Change

The process of advocating for and implementing alterations or improvements within an organization or societal structure.