hard20 pts · first answer countsfraud-riskrevenue-recognition

Sales spike then credit notes

Sales in the last week of March were three times the weekly average, and large credit notes were issued to the same customers in April. What does this suggest, and what should the auditor do?

A.Possible revenue overstatement through cut-off manipulation; test cut-off, review post year-end credit notes and returns, and confirm terms with customersB.Strong sales growth that needs no extra workC.Understated revenue; increase the provision for returnsD.An IT problem; ask for a new report

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Sales spike then credit notes

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