An auditor suspects that certain client employees are ordering merchandise for themselves over the Internet without recording the purchase or receipt of the merchandise.When vendors' invoices arrive,one of the employees approves the invoices for payment.After the invoices are paid,the employee destroys the invoices and the related vouchers.In gathering evidence regarding the fraud,the auditor most likely would select items for testing from the file of all:
A)Cash disbursements.
B)Approved vouchers.
C)Receiving reports.
D)Vendors' invoices.

Question

Quizplus · Accepted Answer

Selecting items from the file of all cash disbursements is the most effective approach because it directly targets the payments made, which are the end result of the fraudulent activity described. By examining cash disbursements, the auditor can trace back to the corresponding (and potentially fraudulent) invoices and vouchers, even if they have been destroyed, as these disbursements should have been recorded in the company's financial records.

An Auditor Suspects That Certain Client Employees Are Ordering Merchandise