Which of the Following Might Alert an Internal Auditor to the Possibility

Multiple Choice

Which of the following might alert an internal auditor to the possibility of fraud in a division? 1. The division is not scheduled for an external audit this year. 2. Sales have increased by 10 percent. 3. A significant portion of management's compensation is directly tied to reported net income of the division.

A) 1 only
B) 3 only
C) 1 and 2 only
D) 1, 2, and 3