You are the newly hired Auditor of a large distributor company. One day you are called by the Chairman of the Audit Committee and was directed to analyze and interpret the situations as presented below.  1. Two (2) delivery trucks full of inventory items were not allowed to be included in the actual count. As claimed by the warehouse supervisor, these are for delivery to the customers. 2. Accounts receivable without customers' subsidiary records. 3. Sales revenue growth shows an upward trend with minimal increase in cost of goods sold. 4. Significant discrepancies on physical count as compared with the inventory records. 5. Large percent of revenues booked in the fourth quarter of Year 1 and large percent of sales returns booked in the first quarter of Year 2. In each of the situation above, analyze and evaluate, then decide whether it is or not a symptom of a revenue or inventory fraud. Explain your answer BRIEFLY.

The following two tests were carried out on the accounts payable at Gardens Nursing Home:  1: A number of suppliers were selected from the list of trade creditors at year-end and  balances traced to supplier invoices and goods received notes to ensure goods were  received prior to the year-end. For two creditors out of 15 tested the balance was only  marginally overstated.  Audit conclusion: Accepted as no material errors located.  2: Selected a number of suppliers’ invoices and checked that the pricing and discount terms  have been reviewed and authorized by the purchase manager. Three out of 20 invoices  tested had not been authorized and incorrect discounts were recorded for these invoices. A  follow-up of the three samples with deviations did not highlight a pattern or specific reason  for the errors.  Audit conclusion: Accepted as the errors in discounts claimed were immaterial.  Required: For each of the test results for Gardens Nursing Home:  (a) Identify whether this is a test…

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An auditor's analytical procedures have revealed that the accounts receivable of a client have doubled since the end of the prior year. However, the allowance for doubtful accounts, as a percentage of accounts receivable remained about the same. Which of the following client explanations most likely would satisfy the auditor?   a. Credit standards were liberalized in the current year. b. Twice as many accounts receivable were written off in the prior year as compared to this year. c. A greater percentage of accounts were currently listed in the "more than 90 days overdue" category than in the prior year. d. The client opened a second retail outlet in the current year and its credit sales approximately equaled the older, established outlet.