Skip to content

CS Professional · Internal and Forensic Audit · Basic Concepts of Forensic Audit

A forensic auditor at Narmada Foods Ltd finds that a senior executive, Mr. Shah, accepted gifts and cash from a supplier in return for awarding contracts at inflated rates. How is this act classified under common fraud taxonomy?

This is corruption, specifically a bribery or kickback scheme, because the executive misused his position to favour a supplier in return for gifts and cash. It is different from simple theft of cash, payroll fraud with ghost employees, or manipulation of financial statements.

  1. ACorruption (bribery and kickback scheme)Correct
  2. BCash larceny from the till
  3. CFinancial statement fraud by understating liabilities
  4. DPayroll fraud through ghost employees

Explanation

Receiving payments from a supplier to favour it in awarding contracts is a kickback, which falls under corruption in the occupational fraud classification. Larceny is theft of cash held, payroll fraud involves fake employees, and statement fraud involves misreporting; none describe this.

Did you get it right without looking?

One question tells you little. A timed set on Basic Concepts of Forensic Audit shows your real accuracy, how long you take and where you lose marks.

Practise Basic Concepts of Forensic AuditFree diagnostic mock

More Basic Concepts of Forensic Audit questions