An internal auditor notices that a division has recorded uncharacteristically high sales and gross margins for the past three months and now suspects the division is reporting fictitious sales. Which course of action should the auditor follow to determine whether fraud has occurred?
A. Trace a sample of shipping documents to related sales invoices to verify proper billing.
B. Send accounts receivable balance confirmations to customers.
C. Compare the division’s sales and gross margins to those of the prior three-month period.
D. Estimate the sales and cost of goods sold for the three-month period by using regression analysis.
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