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:

Shipping Term

Refers to agreed terms between a seller and buyer that outline the details about the delivery of goods, including who is responsible for shipping costs and risk of damage.

Negotiable Document

A written instrument, such as a bill of exchange, promissory note, or check, that guarantees payment of a specific amount of money and is transferable among different parties.

Goods-in-bailment

Items that are temporarily delivered to someone (the bailee) for custody or storage, without transfer of ownership.

Deliver to Order

A stipulation in shipping where goods are delivered to a specific party as per the instructions of the shipping document or bill of lading.