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While performing an audit of the fi nancial statements of a company for the year ended December 31, year 1, the auditor notes that the company’s sales increased substantially in December, year 1, with a corresponding decrease in January, year 2. In assessing the risk of fraudulent fi nancial reporting or misappropriation of assets, what should be the auditor’s initial indication about the potential for fraud in sales revenue? A. There is a broad indication of misappropriation of as sets. B. There is an indication of theft of the entity’s assets. C. There is an indication of embezzling receipts. D. There is a broad indication of financial reporting fraud |
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