An auditor confirms a representative number of open accounts receivable as of December 31 and investigates respondents' exceptions and comments. By this procedure, the auditor would be most likely to learn about which of the following?
A)One of the cashiers has been covering a personal embezzlement by lapping.
B)One of the sales clerks has not been preparing charge slips for credit sales to family and friends.
C)One of the EDP control clerks has been removing all sales invoices applicable to his account from the data file.
D)The credit manager has misappropriated remittances from customers whose accounts have been written off.

Question

Quizplus · Accepted Answer

Confirming open accounts receivable primarily helps in identifying discrepancies in the recorded amounts versus what the customers acknowledge they owe. Lapping, which involves manipulating accounts receivable to cover up embezzlement, is likely to be detected through this process because it directly affects the balances of customer accounts. Other options involve activities that wouldn't directly impact the balances of open accounts receivable in a way that confirmation would typically uncover.

An Auditor Confirms a Representative Number of Open Accounts Receivable