Which of the Following Would Raise a Red Flag in the Audit

question 37

Multiple Choice

Which of the following would raise a red flag in the audit of payroll?

• A) One person in the company is authorized to sign all payroll cheques.
• B) The endorsement on a cancelled payroll cheque included the words "for deposit only" above the payee's signature.
• C) The endorsement on a cancelled payroll cheque included the signature of a supervisor below the signature of the payee.
• D) A supervisor initialled the time card of an employee.

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Definitions:

Framing Effect

The cognitive bias where people react differently to a particular choice depending on how it is presented, such as a loss or gain.

High-End Retailers

Retail outlets that focus on selling premium products and services, often associated with luxury or top-quality items.

Architecture

The art and science of designing and constructing buildings and other physical structures, focusing on aesthetics, functionality, and the spatial experience.

Prospect Theory

A behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are known.