QUESTION: 249 Exam Topic: 3, Volume C

An internal auditor noticed that employees with responsibilities for cash collection had recently issued an unusually large number of credit memos, indicating that the original charges had been made to the wrong customer accounts. From a control standpoint, the auditor would be concerned with the possibility that:

The organization is selling a large number of defective items.
Employees in this function are concealing a theft of cash collected from customers.
Credit memos are not being submitted on a timely basis.
The credit department has not been properly screening customers and, as a result, a large portion of the accounts receivable may not be collectible.

Answer(s): B

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QUESTION: 250 Exam Topic: 3, Volume C

After becoming aware of control weaknesses indicating that a fraud could have been committed, which of the following actions should an internal auditor take next?

Issue a written report identifying the control weaknesses.
Perform tests directed toward the identification of other fraud indicators.
Notify external auditors of the suspicion that fraud has been committed.
Recommend that a fraud investigation be conducted involving internal auditors, lawyers, investigators, security personnel, and other specialists, as appropriate.

Answer(s): B

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