Which of the following situations would indicate increased inherent risk in the accounts payable and acquisition cycle?
A)good quality internal controls for cash handling
B)the use of packaged software for accounting (including accounts payable)
C)the use of clear,standard terms when negotiating vendor discounts
D)significant related party transactions

Question

Quizplus · Accepted Answer

Significant related party transactions can indicate increased inherent risk in the accounts payable and acquisition cycle because there may be a higher likelihood of improper or fraudulent transactions and potential conflicts of interest. Good quality internal controls for cash handling and the use of packaged software for accounting can mitigate inherent risk. The use of clear, standard terms when negotiating vendor discounts may also reduce inherent risk by promoting transparency and fairness in the procurement process.

Which of the Following Situations Would Indicate Increased Inherent Risk