A major consideration in the audit of the general cash balance is the possibility of fraud.The auditor must extend his or her procedures in the audit of year-end cash to determine the possibility of a material fraud when there are:
A) large cash receipts and disbursements during the year.
B) no imprest accounts used for payroll.
C) inadequate internal controls.
D) large cash balances at the end of the year.

Question

Quizplus · Accepted Answer

Inadequate internal controls increase the risk of fraudulent activities in the cash balance. Therefore, the auditor must consider the possibility of material fraud during the audit of year-end cash when there are inadequate internal controls. Other factors listed in the options may also increase the risk of fraud, but inadequate internal controls are the most significant.

A Major Consideration in the Audit of the General Cash