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Answer d is incorrect the time clerk could conceal

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Answer (D) isincorrect. The time clerk could conceal the termination of an employeeand retain that employee’s paycheck. Recordkeeping is inconsistent with asset custody.[263] Gleim #: 3.3.32Upon receipt of purchased goods, receiving department personnel match the quantityreceived with the packing slip quantity and mark the retail price on the goods based ona master price list. The annotated packing slip is then forwarded to inventory controland goods are automatically moved to the retail sales area. The most significantcontrol strength of this activity isImmediately pricing goods for retail sale.A.Matching quantity received with the packing slip.B.Using a master price list for marking the sale price.C.Automatically moving goods to the retail sales area.D.Answer (A) isincorrect. Timing is not as important as the accuracy of prices.Answer (B) isincorrect. Matching quantity received with the packing slip doesnot ensure receipt of the quantity ordered.Answer (C) iscorrect. Use of the master price list ensures that the correct retailprice is marked.Answer (D) isincorrect. Goods may or may not be needed in retail sales.[264] Gleim #: 3.3.33The manager of a production line has the authority to order and receive replacementparts for all machinery that requires periodic maintenance. The internal auditorreceived an anonymous tip that the manager ordered substantially more parts thanwere necessary from a family member in the parts supply business. The unneededparts were never delivered. Instead, the manager processed receiving documents andcharged the parts to machinery maintenance accounts. The payments for theundelivered parts were sent to the supplier, and the money was divided between themanager and the family member. Which of the following internal controls would havemost likely prevented this fraud from occurring?Establishing predefined spending levels for all vendors during the biddingprocess.A.Segregating the receiving function from the authorization of parts purchases.B.Comparing the bill of lading for replacement parts to the approved purchase order.C.Using the company’s inventory system to match quantities requested withquantities received.D.Gleim CIA Test Prep:Part 1 - Internal Audit Basics(720 questions)Copyright 2013 Gleim Publications Inc.Page 143Printed for Sanja Knezevic
Answer (A) isincorrect. Predefined spending levels would probably already includethe fraudulent amounts and would only limit the size of the fraud.Answer (B) iscorrect. Segregating the parts authorization and receiving functionswould have improved internal control. If the parts in question had been sent to thecompany and a receiving report had been prepared by an employee other than the oneordering the goods, the fraud could not have occurred. Moreover, the receivingdepartment should not accept goods unless it has a blind copy of a properly approvedpurchase order for the items.

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Term
Spring
Professor
N/A
Tags
internal auditor, internal auditors, internal audit basics

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