$3.$ Match the continuous auditing alarms to flag the fraud schemes. LO $15-3$ Fraud Scheme a$.$ Operating expenses were illegitimately reclassified as capital expenditures, which Improved the expenditure$-$to$-$revenue" $\{$E$/$R$)$ ratio by reducing the amount of expenses recorded in the current fiscal year. b$.$ Book values of acquired entities were illegitimately reclassified as goodwill on the books, which improved the E$/$R ratio by increasing the effective amortization period of the amounts in question, c$.$ Excessively wrote down the assets included in the corporate acquisitions, which gave "the false Impression that expenses were declining over time in relation to revenue f$.$e$.$ reducing the E$/$R ratio and increasing net income from operations$)."$ d$.$ Allowance for doubtful accounts was underestimated $($along with the corresponding expense entry bad debts expense$)$ to falsely improve the E$/$R ratio. Continuous Auditing Alarms $1.$ Generate an alarm if the allowance for doubtful accounts differs significantly from the last month's ratio $($i$.$e$.,$ to Accounts Receivable$).$ II$.$ Benchmark key ratios $($e$.$g$.,$ E$/$R$)$ against industry averages and generate an alarm when there is a significant discrepancy between the two. iii. Create an alarm that identifies increases in plant, property, equipment, and goodwill that differ significantly from historical averages. iv$.$ Create an alarm that simultaneously identifies $(1)$ reductions in operating expenses that exceed the industry average and $(2)$ increases in capital expenditures that exceed the Industry average.