Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 173

In response to an accounts receivable confirmation, a customer indicated that the invoice listed on the confirmation letter had been paid two months earlier.
This may indicate that:

Answer options

• A. The receivable was selected for confirmation in error.
• B. The customer is a bad credit risk.
• C. The receivable should be written off.
• D. Fraudulent activity has occurred.

Correct answer: D

Explanation

The correct answer is D because if the customer claims to have paid an invoice that is still outstanding, it raises suspicion of possible fraudulent activity. Options A, B, and C do not directly address the implications of the customer's statement regarding the payment and its timing.