A production manager for a medium-sized manufacturing company began ordering excessive raw materials and had them delivered to a wholesale company he runs as a side business. He falsified receiving documents and approved the invoices for payment.
Which of the following audit procedures would most likely detect this fraud?
A . Take a sample of cash disbursement; compare purchase orders, receiving reports, invoices, and check copies.
B . Take a sample and confirm the amount purchased, purchase price, and date of shipment with the vendors.
C . Observe the receiving dock and count material received; compare your counts to receiving reports completed by receiving personnel.
D . Prepare analytical tests, comparing production, material purchased, and raw material inventory levels and investigate differences.
Answer: D