Question

The Fraud Case Study Builder Inc. is an innovative construction company located in Western Canada. It employs staff of 150 and is relatively successful. Even though the company experiences steady growth in recent years, competition is fierce and margins are shrinking. A significant portion of the CEO's pay (Steve Smith) is profit-related. During audit planning this risk is identified and appropriate audit procedures are to be planned and executed to address this risk The General Journal The company provided you with a partial General Journal (GJ_Case_Study_A.csv). The total balance of the Journal is around $ 4,4 million. The FY start date is 1 January. Go to Case Data, and download the data file to your computer. Please note that the materiality for this audit engagement is $10,000 (reduce the weightings for the material value control point to 5% in the MindBridge tool). It is also important to note that bookkeeping is regularly done on weekends. Your task Analyze the general jornal using the MindBridge tool addressing the above fraud risk. Identify no more than 20 transactions using the various investigative features in MindBridge's Ai Auditor. Create 'tasks' for these transactions and export them from the Audit Plan section.

After reading the Case above I want your thought about the Seven transactions below the Case

Answer 1

1. On 28 Dec 2014 i.e. at the end of year Material Hardware transaction is done $14000, which is material. This is a adjustment per Steve Smith need to be audited carefully with the aspects of nature and type and timing of the transaction. Since pay of the Steve Smith is linked with profit.

2. Entries of credit card payment on 31 Dec, the last date of the year to be audited with keeping high risk because these expense may of personal nature.

3. Transfer to payroll on 31 Dec 2014 to be examined, to whom the amount was transferred, what is the calculation basis.

4. Sales to be examined with respect to genuineness and subsequently returnable. Discount given on sale not favourable to someone. Since significant pay of CEO is profit related.