An auditor confirms a representative number of open accounts receivable as of December 31 and investigates respondents' exceptions and comments. By this procedure, the auditor would be most likely to learn of which of the following?
A)One of the cashiers has been covering a personal embezzlement by lapping.
B)One of the sales clerks has not been preparing charge slips for credit sales to family and friends.
C)One of the IT control clerks has been removing all sales invoices applicable to his account from the data file.
D)The credit manager has misappropriated remittances from customers whose accounts have been written off.

Question

Quizplus · Accepted Answer

Confirming accounts receivable primarily helps in identifying discrepancies in the amounts owed by customers as recorded by the company. Lapping, which involves manipulating accounts to cover embezzlement, could be detected through confirmation discrepancies, as customers might report different balances than those recorded. Other options are less likely to be discovered through this method since they involve unrecorded transactions or manipulations not directly related to customer account balances.

An Auditor Confirms a Representative Number of Open Accounts Receivable