You are auditing the financial statements of Holly’s Happenin’ Hula Hoops Club (4H Club). Unbeknownst to you as the auditor, there is a fraud being committed related to the inventory account. For the fraud described below, specifically list a) the assertion about the inventory account that is violated, b) a control procedure the client should have had in place that could have potentially prevented the fraud, and c) an audit procedure that you would likely perform during the audit of inventory that would detect the fraud. Each month, an employee in the receiving department submits a fictitious receiving report to accounting. A few days later, he sends the 4H Club an invoice for the quantity of goods ordered from a small company he owns and operates. The invoice is always paid when the accounts payable clerk matches the receiving report with the vendor’s invoice
Accounting
You are auditing the financial statements of Holly’s Happenin’ Hula Hoops Club (4H Club). Unbeknownst to you as the auditor, there is a fraud being committed related to the inventory account. For the fraud described below, specifically list a) the assertion about the inventory account that is violated, b) a control procedure the client should have had in place that could have potentially prevented the fraud, and c) an
Each month, an employee in the receiving department submits a fictitious receiving report to accounting. A few days later, he sends the 4H Club an invoice for the quantity of goods ordered from a small company he owns and operates. The invoice is always paid when the accounts payable clerk matches the receiving report with the vendor’s invoice
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