CS Professional · Internal and Forensic Audit · Audit and Investigations

An internal auditor at Himalaya Pharma Ltd finds these: (1) a purchasing officer who has not taken leave for four years and lives beyond apparent means, (2) invoices from a vendor always just below the approval limit, and (3) the vendor's address matches the officer's relative's address. Which fraud is most strongly suggested, and what is the best immediate step?

The red flags point to procurement fraud involving a related-party vendor. The auditor should widen scrutiny, preserve documents and escalate to the proper authority confidentially, without tipping off the officer, so that evidence is not destroyed and the investigation is not compromised.

AInventory obsolescence; revise the provisioning policy
BProcurement fraud with a related-party vendor; extend scrutiny, preserve evidence and report to the appropriate authority without alerting the officerCorrect
CCash skimming; recount petty cash openly
DPayroll fraud; freeze all salary payments

Explanation

Never taking leave, lifestyle, split invoices below limits and a shared address point to procurement or kickback fraud with a related vendor. The proper response is confidential escalation and evidence preservation, not confronting the officer, which could lead to destruction of evidence. The other options do not match the red flags.

Did you get it right without looking?

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

Practise Audit and Investigations Free diagnostic mock

More Audit and Investigations questions