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CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques

A forensic auditor reviewing Ganga Steels Ltd has identified suspicious journal entries posted by a finance manager. Which sequence best reflects a sound fraud detection process before the findings are reported?

The sound sequence is to plan and identify red flags, preserve and gather evidence, analyse it, and then interview the suspect before reporting. Interviewing early or alerting the suspect risks evidence tampering and weakens the investigation, so the suspect interview comes late in the process.

  1. AReport allegations to the media, then gather evidence, then interview the manager
  2. BConfront the manager first, then identify red flags, then preserve records
  3. CPlan and identify red flags, preserve and gather evidence, analyse it, then interview the suspect and reportCorrect
  4. DInterview the manager, destroy duplicate records, then close the file

Explanation

A sound process begins with planning and red flag identification, secures and preserves evidence so it cannot be altered, analyses it, and only then interviews the suspect, usually last, before reporting. Confronting early risks evidence tampering, which makes the other sequences unsound.

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