Question:
While performing an audit of the financial statements of a company for the year ended December 31, 2XX1, the auditor notes that the company's sales increased substantially in December, 2XX1 with a corresponding decrease in January, 2XX2. In assessing the risk of fraudulent financial reporting or misappropriation of assets, what should be the auditor's initial indication about the potential for fraud in sales revenue?
a. There is a broad indication of misappropriation of assets.
b. There is an indication of theft of the entity's assets.
c. There is an indication of embezzling cash receipts.
d. There is a broad indication of financial reporting fraud.