There are a number of fraud risks associated with inventory.Additionally, inventory is a complex accounting and auditing areafor a number of reasons. This question relates only to the fraudrisks associated with inventory.
Select the items that relate directly to fraud risks associatedwith inventory. Check all that apply.
a. Schemes to classify expenses as assets
b. Inventory is easily transportable
c. Employee theft of inventory
d. Large manual adjustments to inventory accounts
e. Executives misusing travel and entertainment accounts andcharging them as company expense
f. Inventory often exists at multiple locations with somelocations being remote from the companyâs headquarters
g. Inventory shrinkage, which is a reduction in inventorypresumed to be due to physical loss or theft
h. Identifying obsolete inventory and applying the lower of costor market principle to determine valuation are difficult
i. Inventory accounts may be valued according to variousaccounting valuation methods
j. Employee schemes involving fictitious vendors as means totransfer payments to themselves
k. Executives recording fictitious inventory or inappropriatelyrecording higher values for existing inventory by creating falserecords for items that do not exist
l. Inventory accounts typically experience a high volume ofactivity
There are a number of fraud risks associated with inventory.Additionally, inventory is a complex accounting and auditing areafor a number of reasons. This question relates only to the fraudrisks associated with inventory.
Select the items that relate directly to fraud risks associatedwith inventory. Check all that apply.
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