Which of the following would be a red flag that indicates the possibility of inventory fraud?

Which of the following would be a red flag that indicates the possibility of inventory fraud?

I. The controller has assumed responsibility for approving all payments to certain vendors.

II. The controller has continuously delayed installation of a new accounts payable system, despite a corporate directive to implement it.

III. Sales commissions are not consistent with the organization’s increased levels of sales.

IV. Payments to certain vendors are supported by copies of receiving memos, rather than originals.
A . I and II only
B . II and III only
C . I, II, and IV only
D . I, III, and IV only

View Answer

Answer: C