During an audit of a retail organization, an internal auditor found a scheme in which the warehouse director and the purchasing agent diverted approximately $500,000 of goods to their own warehouse, then sold the goods to third parties. The fraud was not found earlier since the warehouse director updated the perpetual inventory records and then forwarded receiving reports to the accounts payable department for processing. Which of the following procedures would have most likely led to the discovery of the missing materials and the fraud?

• A.Select a random sample of purchase orders and trace to receiving reports and to the records in the accounts payable department.
• B.Select a random sample of sales invoices and trace to the perpetual inventory records to see if inventory was on hand. Investigate any differences.
• C.Select a random sample of receiving reports and trace to the recording in the perpetual inventory records. Note differences and investigate by type of product.
• D.Take an annual physical inventory, reconciling amounts with the perpetual inventory records. Note the pattern of differences and investigate.

Comment: *

Name: *

Email: *

Verification: *

CORRECT TEXT
A fast-food company is developing a computer simulation involving arrival time at a drive-through restaurant. The distribution for arrival times is:
Time Single-Digit Random Between Arrivals Probability Number Assigned 1 minute
0.1 0 2 minutes
0.2 1, 2 3 minutes 0.3
3, 4, 5
4 minutes
0.4
6, 7, 8, 9
Six random numbers are selected to represent the arrival of six cars: 1, 6, 9, 0, 5, 6. The mean time between arrivals for these cars, in this run of the simulation model, is:

• A.2 minutes.
• B.1 minute.
• C.3 minutes.
• D.4 minutes.

Comment: *

Name: *

Email: *

Verification: *

Which of the following files, when compared with billing records, would provide the best source of information for determining if all goods shipped are billed to customers?

• A.Accounts receivable transactions.
• B.Prenumbered shipping documents.
• C.Customer purchase orders.
• D.Prenumbered customer invoices.

Comment: *

Name: *

Email: *

Verification: *

An employee in the sales department completes a purchase requisition and forwards it to the purchaser.
The purchaser places competitive bids and orders the requested items using approved purchase orders.
When the employee receives the ordered items, she forwards the packing slips to the accounts payable department. The invoice for the ordered items is sent directly to the sales department, and an administrative assistant in the sales department forwards the invoices to the accounts payable department for payment. Which of the following audit steps best addresses the risk of fraud in the cash receipts process?

• A.Observe whether the purchase orders are sequentially numbered.
• B.Examine whether the sales department supervisor approves invoices for payment.
• C.Verify that approvals of purchasing documents comply with the authority matrix.
• D.Determine whether the accounts payable department reconciles all purchasing documents prior to payment.

Comment: *

Name: *

Email: *

Verification: *

What type of analysis is performed when an auditor tests for unusual variations in information by comparing the number of employees working at a factory site with the direct cost of production each month over a period of one year?

• A.Trend analysis.
• B.Ratio analysis.
• C.Regression analysis.
• D.Horizontal analysis.

Comment: *

Name: *

Email: *

Verification: *