Maple Company has an increase in purchases from specific vendors and an increase in raw materials inventory for the items purchased from these vendors.Sales for the company have not increased and are not forecast to increase.From this information an auditor might suspect
A)An increase in obsolete raw material inventory.
B)Theft of raw material inventory.
C)Kickbacks from vendors
D)Poor security over raw material inventory.

Question

Quizplus · Accepted Answer

The increase in purchases from specific vendors and an increase in raw materials inventory for the items purchased from these vendors might indicate that kickbacks are being received from these vendors. This could be a potential area of fraud, and the auditor should investigate further. The other options, such as an increase in obsolete inventory or poor security over raw material inventory, can't be conclusively determined from the given information.

Maple Company Has an Increase in Purchases from Specific Vendors