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    Question

    During audit, you find multiple vendors created under

    similar names, with round-sum payments made regularly below approval thresholds. Management insists they are genuine. As per SA 240, what is the auditor’s appropriate response?
    A Ignore, since payments are within threshold. Correct Answer Incorrect Answer
    B Accept management’s oral confirmation. Correct Answer Incorrect Answer
    C Perform extended procedures like vendor verification and data analytics. Correct Answer Incorrect Answer
    D Immediately qualify opinion. Correct Answer Incorrect Answer
    E Report directly to regulator. Correct Answer Incorrect Answer

    Solution

    Fraud indicators require expanded audit procedures (external confirmation, trend analysis, data mining) before concluding.

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