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A client operates two plants.  In Plant A, throughout the entire cutoff test window, all sales have been recorded as FOB shipping point.  In Plant B, all sales have been recorded as FOB shipping point in the cutoff window prior to year-end and either FOB shipping point or FOB destination in the cutoff window subsequent to year end.  Which plant would an auditor judge to have higher fraud risk?   Question 27 options:   Plant A would have higher fraudulent financial reporting risk than Plant B.   Plant B would have higher risk of the misappropriation of assets than Plant A.   Plant A would have higher risk of the misappropriation of assets than Plant B.   Plant B would have higher fraudulent financial reporting risk than Plant A.

A client operates two plants.  In Plant A, throughout the entire cutoff test window, all sales have been recorded as FOB shipping point.  In Plant B, all sales have been recorded as FOB shipping point in the cutoff window prior to year-end and either FOB shipping point or FOB destination in the cutoff window subsequent to year end.  Which plant would an auditor judge to have higher fraud risk?   Question 27 options:   Plant A would have higher fraudulent financial reporting risk than Plant B.   Plant B would have higher risk of the misappropriation of assets than Plant A.   Plant A would have higher risk of the misappropriation of assets than Plant B.   Plant B would have higher fraudulent financial reporting risk than Plant A.

Auditing: A Risk Based-Approach (MindTap Course List)
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter9: Auditing The Revenue Cycle.
Section: Chapter Questions
Problem 36RQSC
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A client operates two plants.  In Plant A, throughout the entire cutoff test window, all sales have been recorded as FOB shipping point.  In Plant B, all sales have been recorded as FOB shipping point in the cutoff window prior to year-end and either FOB shipping point or FOB destination in the cutoff window subsequent to year end.  Which plant would an auditor judge to have higher fraud risk?

 

Question 27 options:

 

Plant A would have higher fraudulent financial reporting risk than Plant B.
 

Plant B would have higher risk of the misappropriation of assets than Plant A.
 

Plant A would have higher risk of the misappropriation of assets than Plant B.
 

Plant B would have higher fraudulent financial reporting risk than Plant A.
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