Maple Company has an increase in purchases from specific vendors and an increase
ID: 2559624 • Letter: M
Question
Maple Company has an increase in purchases from specific vendors and an increase in raw materials inventory for the items purchased from these s for the company have not increased and are not forecast to increase. From this information an auditor might suspect O an increase in obsolete raw material inventory theft of raw material inventory O kickbacks from vendors. O poor security over raw material inventory. QUESTION 16 What evidence is appropriate to determine whether recorded purchase transactions are valid and the vendors charged the correct prices? Purchase requisitions and accounts payable entries. O Receiving reports and purchase orders. O Purchase requisitions and purchases orders. O Purchase orders and bid quotes. QUESTION 17 Matthew Corp. has changed from a system of recording time worked on clock cards to a computerized payroll system in which employees updates all payroll records. Because of this change, a generalized part of the audit trail is altered. the potential for payroll-related fraud is diminished. transactions must be processed in batches. QUESTION 18Explanation / Answer
Question no: 15 Answer is Option (3) : Kickbacks from vendors The Auditor might suspect Kick back from vendors incase of increse in purchases from Specific vendors and results increse in raw materials Inventory with out increse not incresed or not forecast to increse . Auditor need to identify the type of kick back involved in this transaction by examining. Question no: 16 Answer is Option (2) receiving reports and purchase orders By comapring the prices in the purchasing orders with the recorded purchased transctions, we can ensure that the vendors are charged the correct price that mentioned in the purchase order as per the contract of purchase. Question : 17 Answer is option (2) part of the Audit trail is altered Audit trail has been altered when there is change in paper based system to magnetic cards which automatically records updates recording Chack in and check out. The auditor need to ensure that Audit procedures has been changed inrepect of the changes Methods. Audits need to ensure Internal controls has been changed and monitered in respect of changed system.