Auditors often perform some type of risk analysis in deciding what aspects of operations to audit and the nature, timing, and extent of their procedures. Which of the following would an auditor most likely consider an indication of material risk?
A. A high turnover rate for warehouse labor.
B. Inadequate separation of responsibilities between the accounting and warehouse functions.
C. A change in management in the receiving department as the result of promotion of the former department head.
D. Special procedures allowing minor purchases to bypass the receiving department and be delivered directly to the appropriate requesting department.
Ans: D. Special procedures allowing minor purchases to bypass the receiving department and be delivered directly to the appropriate requesting department.
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