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CS Professional · Internal and Forensic Audit · Special Points relating to Internal Audit in various Entities

A small manufacturing proprietorship's internal auditor wants to detect a possible fictitious-vendor fraud. Which technique is most suited?

Comparing the vendor master with employee addresses and bank details, and checking for vendors with payments but no delivery records, is best. Fictitious vendors often overlap with employee data and lack goods receipts. Petty cash counts or depreciation reviews do not test this risk.

  1. AComparing the vendor master with employee addresses and bank account details, and checking vendors with no delivery recordsCorrect
  2. BRecounting petty cash at year end
  3. CReviewing the depreciation method
  4. DConfirming share capital with the registrar

Explanation

Fictitious vendors typically share addresses or bank accounts with employees and have payments without goods receipts. Matching master data and checking receipts targets this fraud directly. Petty cash recounts, depreciation review and share capital confirmation do not address vendor fraud.

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