Property acquisitions that are misclassified as maintenance expense would most likely be detected by an internal accounting control system that provides for:

Question

Quizplus · Accepted Answer

Choice "A" is correct. Investigation of variances in a formal budget might show maintenance costs over budget or acquisition costs under budget, either of which would trigger an investigation. Choice "B" is incorrect. Review of journal entries relating to depreciation would not disclose acquisitions misclassified as maintenance expense, since no depreciation would be recorded for the misclassified items. Choice "C" is incorrect. Segregation of duties in the accounts payable department would have no effect on the account classification of an approved invoice. Choice "D" is incorrect. Since the internal auditor would be looking at invoices and checks related to recorded property acquisitions, he or she would not be likely to identify payments that were erroneously excluded from the property account.

Property Acquisitions That Are Misclassified as Maintenance Expense Would Most