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 supplier discounts
D) significant related party transactions

Question

Quizplus · Accepted Answer

Significant related party transactions create a higher risk of potential conflicts of interest and may indicate the need for greater scrutiny and testing of the accounts payable and acquisition cycle. The other options listed may help mitigate inherent risk, but they do not necessarily indicate an increase or decrease in risk.

Which of the Following Situations Would Indicate Increased Inherent Risk