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CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing

An internal auditor at a Chennai retail chain wants to test whether sales returns are being used to conceal cash misappropriation. Using audit software, she extracts all credit notes issued after 10 pm, just below the Rs 5,000 approval limit, and issued by the same cashier. Which tool or technique is this?

This is a computer-assisted audit technique using data analytics with exception filtering. The auditor applies risk-based criteria such as timing, just-below-limit amounts and user identity to the entire population of credit notes, thereby spotting unusual patterns indicating possible fraud, rather than relying on a sample or on observation.

  1. AComputer-assisted audit technique using data analytics with exception filteringCorrect
  2. BTest of control through observation of the cashier
  3. CStatistical sampling for estimating error rate
  4. DExternal confirmation from customers

Explanation

Extracting a whole population using defined risk criteria (time, threshold, user) with audit software is a computer-assisted audit technique with exception testing. It is not sampling because every record is screened. Observation and confirmation are not used here.

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