Explain how each situation could indicate fraud risk

Assignment Help Financial Management
Reference no: EM131329450

Explain how each situation could indicate a fraud risk and how the auditor could confirm or dispel it.

a. An employee can authorize medical insurance claims and enter them into the system for payment without supervisory review. What might happen?

b. The inventory warehouse manager was also responsible for making the physical inventory observation and reconciling discrepancies to the perpetual inventory records. What might happen?

c. The petty cash custodian was replaced and the frequency of fund reimbursement decreased from every two days to every four days. What might you suspect?

d. Both sales and income may have been overstated by recording a false cash sale at the end of the year. What “dangling debit” might give the scheme away?

e. A company may have recorded fictitious sales. What account could you audit to determine whether this has happened?

Reference no: EM131329450

Questions Cloud

Firm has the book-value balance sheet : A firm has the following book-value balance sheet; Debt =$ 5 ,000, Common Stock ($1 par)= 556 and Retained Earnings = $ 27 ,000. The book value of assets is the total of Debt, Common Stock and Retained Earnings. The firm's bonds are currently selling..
What would be the present value of this bond : Determine the value of a $1000 face value bond with a stated interest rate of 7% return and a 10 year life ? If interest rate increase to 10% , what would be the present value of this bond? If interest rate decrease to 5%, what would be the present v..
What is maximum price per share schultz should pay for arras : Schultz Industries is considering the purchase of Arras Manufacturing. Arras is currently a supplier for Schultz, and the acquisition would allow Schultz to better control its material supply. The current cash flow from assets for Arras is $7 million..
What is the wacc for the company : The Saunders Investment Bank has the following financing outstanding. Debt: 40,000 bonds with a coupon rate of 8 percent and a current price quote of 112.0; the bonds have 20 years to maturity. 210,000 zero coupon bonds with a price quote of 18.5 and..
Explain how each situation could indicate fraud risk : Explain how each situation could indicate a fraud risk and how the auditor could confirm or dispel it. An employee can authorize medical insurance claims and enter them into the system for payment without supervisory review. What might happen?
What will the dividend be one year from now : Dividend smoothing: The Deck Company just paid a dividend of $1.55 per share of stock. Its target payout ratio is 45 percent. In one year, the company expects to have earnings per share of $7.10. If the adjustment rate is .4, as defined in the Lintne..
Operating exposure to the pound : LZX Ltd. is a UK firm that exports products to the United States. LZX’s FX operating exposure to the US dollar is 1.80. If a US multinational acquired LZX, what would be the multinational’s FX operating exposure to the pound from LZX operation?
Compute company revenue exposure to the us dollar : Assume a firm’s home currency is British pounds. Let the current spot FX rate be 1.70 $/£ and the expected revenues be £500 per year. Assume that if the FX value of the pound changes to 1.80 $/£, the expected revenue in pounds would change to £750 pe..
Firm new expected us dollar operating cash flow level : US company has operating cash flow measured in US dollars of $700 per year, given a current spot FX rate of 0.90 $/CA. The company has an FX operating exposure to the Canadian dollar of 0.50. If the Canadian dollar appreciates in value by 15% (relati..

Reviews

Write a Review

Financial Management Questions & Answers

  Expected return and standard deviation of the minimum

The correlation between the two stocks is -.15. What are the expected return and standard deviation of the minimum variance portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%..

  What constant rate is the stock expected to grow

Mitts Cosmetics Co.'s stock price is $50.30, and it recently paid a $2.25 dividend. This dividend is expected to grow by 25% for the next 3 years, then grow forever at a constant rate, g; and rs = 13%. At what constant rate is the stock expected to g..

  Approximate percentage change in price if interest rate rise

Draw the price-ytm (i) graph for a 5% fixed-coupon bond that has 10 years to maturity (assuming annual coupon payments). Calculate the duration for this bond if the interest rate is 3%. What is the approximate percentage change in price if the intere..

  What is the cash flow to stockholders

The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed $520,000 in the common stock account and $5.5 million in the additional paid-in surplus account. The 2015 balance sheet showed $560,000 and $5.7 million in the same two accounts, respect..

  What is the banks cost of preferred stock

Holdup Bank has an issue of preferred stock with a $5.05 stated dividend that just sold for $87 per share. What is the bank’s cost of preferred stock?

  What transaction should you do

You hold a stock portfolio worth $15 million with a beta of 1.05. You would like to lower the beta to 0.90 using S&P 500 futures, which have a price of 460.20 and a multiplier of 250. What transaction should you do?

  Identify two items or issues that cannot be derived

Identify two items or issues that cannot be derived from the financial statements of the two companies that you selected for your research.

  Total assets-what is its return on equity

ROE Needham Pharmaceuticals has a profit margin of 5.5% and an equity multiplier of 1.8. Its sales are $120 million and it has total assets of $50 million. What is its Return on Equity (ROE)?

  Dissolve the partnership and obtain a share of the profits

In 1991, Mario Smith and Luigi Joseph signed a lease for 3960 South State Street in Philadelphia, Pennsylvania. Joseph paid $6,000 for the first and last month's rent, and said to Smith, “We are in this together, partner.” Smith bought business cards..

  Working on the valuation for an upcoming IPO

You are working on the valuation for an upcoming IPO. The company that wants to sell its stock expects the following future free cash flows (FCF, in millions of dollars): -7 in year 1, 2 in year 2, 17 in year 3, and cash flows are expected to grow st..

  What is required reporting for discontinued operations

What is the required reporting for discontinued operations?

  Illustrate impact on the monetary policy reaction function

Illustrate the impact on the monetary policy reaction function and on equilibrium inflation and output both in the short run and in the long run.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd