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AA – Audit & Insurance

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Showing 7–9 of 10 questions

Question 7

Sheraton & Co places orders by telephone. When a call is received, the person receiving the order checks that the customer’s credit status supports the order and that the customer’s current balance is below the maximum level and then immediately inputs the order into the system.

The risk of management fraud could increase in this case for Sheraton & Co in the presence of ___________________.

Select an option, then click Submit answer.

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    improved internal control system of Sheraton & Co
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    frequent changes in supplies by Sheraton & Co
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    substantial increases in sales of Sheraton & Co
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    Sheraton and Co’s management incentive system based on sales done in a quarter
Question 8

The following describes the processes which make up the sales system in operation at Shevhrol and Co.

Which of the following processes represents strength or weakness in the system?

(i) Orders are placed by telephone. When a call is received, the person receiving the order checks that the customer’s credit status supports the order and that the customer’s current balance is below the maximum level and then immediately inputs the order into the system.

(ii) The order automatically generates a message to the distribution centre which despatches the goods and to the accounts department, which immediately raises an invoice and sends it to the customer.

(iii) Customer queries are dealt with by reception staff.

Select an option, then click Submit answer.

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    (i) and (ii) represent strengths and (iii) represents weakness
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    (i) represents strength and (ii) and (iii) represent weaknesses
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    (ii) represents strength and (i) and (iii) represent weaknesses
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    All processes represent strengths
Question 9

Indicate the most objective and relevant evidence in a computer environment involving fraud.

Select an option, then click Submit answer.

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    Physical examination.
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    Physical observation.
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    Inquiries of people.
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    Computer logs.