Auditing and Assurance Services 1st Edition by Iris Stuart

Exercise 23

Which of the following is an example of fraudulent financial reporting a. Company management changes inventory count tags and overstates ending inventory, while understating cost of goods sold.
B) The treasurer diverts customer payments to his personal due, concealing his actions by debiting an expense account, thus overstating expenses.
C) An employee steals inventory and the "shrinkage" is recorded in cost of goods sold.
D) An employee steals small tools from the company and neglects to return them; the cost is reported as a miscellaneous operating expense.