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CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques

An internal auditor at Ganga Retail Ltd receives an anonymous complaint through the whistle-blower hotline alleging inflated purchase invoices by a buyer. What should be the first step in line with good fraud detection practice?

The first step is to log the complaint, assess its credibility and preserve relevant records before starting a detailed inquiry. Early evidence preservation prevents tampering, while confronting the buyer or publicising the allegation could compromise the investigation. Anonymous tips remain an important detection source and should not be ignored.

  1. AConfront the buyer immediately and demand an explanation
  2. BLog the complaint, assess its credibility and preserve relevant records before any detailed inquiryCorrect
  3. CPublish the allegation to all staff as a warning
  4. DIgnore it because it is anonymous

Explanation

Complaints should be recorded and evaluated, and evidence such as invoices and system logs preserved to prevent tampering. Confronting the suspect early can alert them and destroy evidence. Ignoring anonymous tips loses a major detection source.

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