An organization discovered fraudulent activity involving the employee time-tracking system. One employee regularly docked in and clocked out her co-worker friends on their days off, inflating their reported work hours and increasing their wages. Which of the following physical authentication devices would be most effective at disabling this fraudulent scheme?
Correct Answer: B
Question 42
The best evidence that contingency planning is effective is to have:
Correct Answer: C
Question 43
Which of the following situations best applies to an organisation that uses a project, rather than a process, to accomplish its business activities?
Correct Answer: B
Question 44
Which of the following inventory costing methods requires the organization to account for the actual cost paid for the unit being sold?
Correct Answer: D
The specific identification method is an inventory costing approach where the actual cost of each individual unit sold is recorded. This method is used when items are uniquely identifiable, such as in industries dealing with luxury goods, automobiles, or custom-manufactured products. * Correct Answer (D - Specific identification) * Under the specific identification method, each inventory unit is tracked separately, and its actual purchase cost is assigned to the cost of goods sold (COGS) when sold. * This method is commonly used for high-value, low-volume items where unique tracking is feasible. * The IIA's GTAG 8: Audit of Inventory Management explains how different costing methods impact financial reporting and internal controls. * Why Other Options Are Incorrect: * Option A (LIFO - Last-in, First-out): * LIFO assumes that the most recent (last-in) inventory is sold first, but it does not track actual unit cost. Instead, it assigns the cost of the newest inventory to COGS. * LIFO is often used for tax benefits but does not follow actual unit cost identification. * Option B (Average cost): * The weighted average cost method calculates an average cost for all inventory units rather than assigning actual unit costs. * This method smooths out price fluctuations but does not track specific items' costs. * Option C (FIFO - First-in, First-out): * FIFO assumes that the oldest (first-in) inventory is sold first, assigning its cost to COGS. * However, like LIFO, it does not track individual unit costs. * IIA GTAG 8: Audit of Inventory Management - Explains different inventory costing methods, including specific identification. * IIA Practice Guide: Assessing Inventory Risks - Covers inventory valuation and fraud risks. Step-by-Step Explanation:IIA References for Validation:Thus, the specific identification method (D) is the only one that accounts for the actual cost paid for each unit sold.
Question 45
Several organizations have developed a strategy to open co-owned shopping malls. What would be the primary purpose of this strategy?
