Red Flags That Auditors Can Use to Alert Them to the Possibility

question 42

Multiple Choice

Red flags that auditors can use to alert them to the possibility that a fraud may have occurred include:

• A) Strong internal controls.
• B) Routine transactions.
• C) A high turnover of key employees.
• D) Effective internal auditing staff.

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Definitions:

Construct Validity

The accuracy of a test in measuring what it alleges to assess.

Test Standardization

The process of administering a test under consistent conditions to ensure the reliability and validity of the results.

Comparison Group

A control group used in an experiment that does not receive the experimental treatment, allowing researchers to compare outcomes.

75th Percentile

A statistical measure indicating that 75% of the observed values fall below this point, often used in assessments to understand distribution.