Question

While auditing a client, the CEO asks you to look carefully at cash flows. You notice that cash flows have decreased every year. Upon learning of your findings, the CEO remarks, "I seem to bring in more customers every year, but the cash is not there." You tell him that fraud may be occurring, and he asks you to investigate. The two of you agree that the most likely place for a fraud to be occurring is cash collections, and the CEO provides the names of three employees involved in the cash collection process. The CEO then asks how you plan to begin the investigation. Investigations should usually begin by interviewing the prime suspect or suspects, in this case the three employees who handle cash collections.

a. Trueb. False

Answer 1

The answer is: FALSE

Step-by-step explanation:

Documents are the most significant evidence in most fraud cases. Those who commit fraud will generally try to manipulate documentary evidence. Investigating the company's databases and accounting records are the best way to get documentary evidence. Also, documentary evidence is considered to be more reliable than eyewitness testimony.