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Question 103

An internal auditor is conducting tests to determine if an organization is in compliance with its payment approval policies. After reviewing a sample of vouchers selected, the internal auditor concluded that there were indicators of fraud. Which of the following would be the most appropriate method to expand the audit test to achieve the audit objective?

I. Validate the completeness of the accounts payable files.

II. Examine the sample of vouchers in greater detail.

III. Increase the number of vouchers in the sample.

IV. Broaden the scope of the examination to include credits received by accounts payable.

    Correct Answer: B

    To determine if an organization is in compliance with its payment approval policies and considering the indicators of fraud, the most appropriate methods would be to examine the sample of vouchers in greater detail and to increase the number of vouchers in the sample. Examining the sample in greater detail allows for a deeper investigation into the potential indicators of fraud, while increasing the sample size helps ensure that the findings are more representative and robust. Validating the completeness of accounts payable files and broadening the scope to include credits received by accounts payable fall beyond the immediate objective of verifying compliance with payment approval policies and addressing potential fraud indicators.

Discussion
John1237Option: B

Examining the sample of vouchers in greater detail is only relevant if the internal auditor wants to expand the audit test. Otherwise, it may be sufficient to increase the number of vouchers in the sample. Option I is to verify that all liabilities are accounted for (not paid). This requires tracing the transactions. Option IV may be another way of verifying/tracing the completeness of recorded liabilities.

John1237

To complete Option 1, the vouching procedure looks for existence, not completeness. At the same time, fraud investigation requires discovery sampling, not completeness.

asdfghjk2020Option: B

The audit objective is to determine if an organization is in compliance with its payment approval policies, choice I & IV are out of the audit objective. (completeness of AP files & credits received by AR.

KonradKOption: D

Why not D? Can someone explain because B seems not right to me. Thanks