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CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques

An internal auditor at Sundaram Pharma extracts the sequence of purchase order numbers for the year and finds that PO numbers 4107 to 4119 are missing, with no cancellation record. Which analytic test identified this exception and what does it mainly indicate?

This is a gap test. It scans sequential document numbers for breaks, and unexplained missing purchase orders may signal deleted, unrecorded or unauthorised transactions, so the auditor should investigate them. A duplicate test would instead detect repeated entries, not absent numbers.

  1. AGap test; possible unrecorded, deleted or unauthorised documentsCorrect
  2. BRatio test; possible overstatement of inventory
  3. CDuplicate test; possible double payment to vendors
  4. DOutlier test; possible price inflation by suppliers

Explanation

Checking a numerically sequential series for missing numbers is a gap test. Unexplained gaps suggest documents were deleted, hidden or raised outside the system. A duplicate test would find repeated numbers, not missing ones.

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