IIA-CIA-Part2 Exam - Question 1

Question

Which of the following would be a red flag that indicates the possibility of inventory fraud?

I. The controller has assumed responsibility for approving all payments to certain vendors.

II. The controller has continuously delayed installation of a new accounts payable system, despite a corporate directive to implement it.

III. Sales commissions are not consistent with the organization's increased levels of sales.

IV. Payments to certain vendors are supported by copies of receiving memos, rather than originals.

Examice · Accepted Answer

Indicators I, II, and IV are red flags that suggest the possibility of inventory fraud. The controller assuming responsibility for approving all payments to certain vendors (I) and delaying the installation of a new accounts payable system (II) could both point toward individuals trying to manipulate or conceal financial transactions. Payments supported by copies of receiving memos instead of originals (IV) suggest potential falsification or mismanagement of inventory records. While inconsistent sales commissions (III) might indicate other types of financial irregularities, they don’t directly suggest inventory fraud.

thabash · Answer

sales commission has nothing to do with vendors, that's why c is out, all others are ok

Hazman · Answer

key word is the inventory fraud

LeHso · Answer

Good question I liked it

Icecold166 · Answer

Are these questions still valid?

IIA-CIA-Part2 Exam - Question 1

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