Pablo, an external audit consultant, reviewed the fraud controls for Jamestown Supply. Jamestown recently changed senior leadership after a small fraud incident resulting from the tone at the top. New leaders have asked that Pablo recommend additional controls to help convey that fraudulent activity will not be tolerated. Pablo has recommended that Jamestown implement vertical and horizontal financial statement analysis to detect possible occurrences of
A) sham sales.
B) unauthorized shipments.
C) channel stuffing.
D) All of these answer choices are correct.

Question

Quizplus · Accepted Answer

Vertical and horizontal financial statement analysis can help detect various types of fraudulent activities, including sham sales, unauthorized shipments, and channel stuffing, by identifying unusual trends or discrepancies in the financial data over time (horizontal analysis) or across different components of the financial statements at a single point in time (vertical analysis).

Pablo, an External Audit Consultant, Reviewed the Fraud Controls for Jamestown