Refer to Case Study 4. Your recommendations were effective and the manager of the inventory storeroom was terminated and replaced by a new manager. Six months later, you return to perform another audit of the inventory storeroom and find a new set of problems. 1) There are no physical safeguards against theft and fire. 2) Purchase orders are not used. 3. The manager handles all purchases. What are your recommendations? Search forums

Refer to Case Study 4. Your recommendations were effective and the manager of the inventory storeroom was terminated and replaced by a new manager. Six months later, you return to perform another audit of the inventory storeroom and find a new set of problems. 1) There are no physical safeguards against theft and fire. 2) Purchase orders are not used. 3. The manager handles all purchases. What are your recommendations? Search forums

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

Problem 25RQSC

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Matching Type: Choose appropriate controls with the given possible frauds and errors.- You can choose multiple controls for 1 number of possible errors and controls - controls already answered from preceding number can still be answered for succeeding number.
Choose only one answer as well as state their reasons/rationale for the answer chosen. 3) A sales representative mistakenly entered a nonexistent account number into the system. As a result, the goods were shipped but the customer was never billed. Which type of control would be most effective in preventing this type of problem?a. Turnaround documentb. Completeness checkc. Field checkd. Validity checke. Check digit verification
What internal control procedure(s) would provide protection against the following threats? a. Theft of goods by the shipping dock workers, who claim that the inventory shortages reflect errors in the inventory records.b. Posting the sales amount to the wrong customer account because a customer account number was incorrectly keyed into the system .c. Making a credit sale to a customer who is already four months behind in making payments on his account. d. Authorizing a credit memo for a sales return when the goods were never actually returned. e. Writing off a customer’s accounts receivable balance as uncollectible to conceal the theft of subsequent cash payments from that customer. f. Billing customers for the quantity ordered when the quantity shipped was actually less due to back ordering of some items .g. Lost sales because of stockouts of several products for which the computer records indicated there was adequate quantity on hand. h. A sales clerk sold a $7,000 wide-screen TV…
You are a fraud examiner and have been hired by Blackman Company to carry out an investigation. Blackman is a beverage company that has experienced increased shipments of beverages but no increase in revenue. Management suspects that inventory is being shipped to unknown places or is being stolen.How would you use invigilation to help you determine whether inventory is being stolen or shipped to unknown locations? Briefly explain how you would carry out this investigative procedure.
As the lead accountant for a small company, you notice that inventory purchases from a certain vendor have increased dramatically over the past few months, whereas purchases from all other vendors have decreased. You suspect that something may not be right and that there may be a fraudulent relationship between someone in your company and the vendor that is getting increased business. question: Which theft act investigative method would you use to investigate your suspicions? state evidences that you to support suspicions.
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Determine whether each procedure described below is an internal control strength or weakness; then identify the internal control principle violated or followed for each procedure. 1. The same employee requests, records, and makes payment for purchases of inventory. 2. The company saves money by having employees involved in operations perform the only review of internal controls. 3. Time is saved by not updating records for use of supplies. 4. The recordkeeper is not allowed to write checks or initiate EFTs. 5. Each salesclerk is in charge of her own cash drawer.
Which of the following are examples of preventive controls? Select all that apply. O account coding on purchase orders is checked by the computer using a table of valid account numbers computerized accounting system will not allow a sale to be processed if a customer has exceeded its credit limit O quarterly review of credit balances in accounts receivable for reasonableness O sales manager reviews daily shipments, total sales, and sales per unit shipped O sales invoices are priced automatically using a master pricing file
For each of the following three independent cases of employee fraud, recommend how to prevent similar problems in the future: Case A: Due to abnormal inventory shrinkage in the audiovisual department at a retail chain store, internal auditors conducted an in- depth audit of the department. They learned that a customer frequently bought large numbers of small electronic components from a certain cashier. The auditors discovered that they had colluded to steal electronic components by not recording the sale of items the customer took from the store. Case B: During an unannounced audit, auditors discovered a payroll fraud when they distributed paychecks instead of department supervisors. When the auditors investigated an unclaimed paycheck, they discovered that the employee quit four months previously after arguing with the supervisor. The supervisor continued to turn in a time card for the employee and pocketed his check. Case C: Auditors discovered an accounts payable clerk who made…
Select one of the journal entry testing analytics from the following list and explain why it is useful in detecting journal entry fraud risk. Use the internet to find examples to support your answer. Round dollar entries Revenue reversals Unusual dates Management override General ledger close Dormant accounts