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Exam IIA-CIA-Part2 topic 3 question 83 discussion

Actual exam question from IIA's IIA-CIA-Part2
Question #: 83
Topic #: 3
[All IIA-CIA-Part2 Questions]

An internal auditor notices that a division has recorded uncharacteristically high sales and gross margins for the past three months and now suspects the division is reporting fictitious sales. Which course of action should the auditor follow to determine whether fraud has occurred?

  • A. Trace a sample of shipping documents to related sales invoices to verify proper billing.
  • B. Send accounts receivable balance confirmations to customers.
  • C. Compare the division's sales and gross margins to those of the prior three-month period.
  • D. Estimate the sales and cost of goods sold for the three-month period by using regression analysis.
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Suggested Answer: B 🗳️
by tpl87 at June 9, 2021, 12:10 p.m.

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balqis32
4 months ago
A/R confirmations is to confirm that sales are valid. If invalid, means the employee created fictitious sales
upvoted 1 times
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LeHso
2 years, 6 months ago
B involves external information which is more reliable.
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tpl87
2 years, 7 months ago
Why not answer A? A is related to the shipping documents, these will prove that het goods are actually shipped in the relevant period. If the goods are not shipped, they cannot be recorded as sales (depending on applicable incoterms). A/R proves nothing to my opinion in this case...
upvoted 2 times
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