Exam IIA-CIA-Part1 topic 4 question 48 discussion

Actual exam question from IIA's IIA-CIA-Part1

Question #: 48
Topic #: 4

An internal auditor for a large computer company suspects that returned computer systems are being repackaged as new products and shipped to other customers before the defects have been repaired. Which of the following would be the most persuasive piece of evidence in support of the auditor's suspicions?

A. Credit memos issued after year end for goods shipped before year end.
B. Evidence of returned goods in the shipping and receiving area.
C. An unusual number of customer complaints.
D. The results of a complete physical inventory taken at year end.

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Suggested Answer: C 🗳️

by Shivam1416 at June 22, 2020, 11:59 a.m.

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Tjspahr1

1 year, 10 months ago

B is incorrect. Evidence of returns could be normal. However, A seems viable. Returned units could be repackaged/sold as new prior to year end, and the credit memos for the returned items issued after year end. This would benefit the company by overstating revenue for the year.

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John1237

1 month, 2 weeks ago

This is not a cut-off test. Also the test does not concern only the year end. Credit memos issued after year end for goods shipped before year end, can be a normal procedure when no fraud occurs. Here, goods received and reshipped are included in the normal inventory (Option D). The right option is solution C.

upvoted 1 times

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Shivam1416

2 years ago

Correct answer should be B

upvoted 2 times

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Exam IIA-CIA-Part1 topic 4 question 48 discussion

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Tjspahr1

John1237

Shivam1416

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