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

An internal auditor of Narmada Bank wants to detect possible fictitious deposit accounts used for layering funds. Which procedure is the most effective first step using data analytics on the core banking data?

The best first step is to run data analytics exception reports on core banking data, looking for sudden large credits followed by quick debits, reactivated dormant accounts and shared mobile numbers or addresses across accounts. These indicators point to fictitious or layering accounts, unlike the unrelated procedures offered.

  1. ARun exception reports on accounts with sudden high-value credits followed by quick debits, dormant-account reactivation and common mobile numbers or addressesCorrect
  2. BConfirm the closing balance of the bank's own premises
  3. CReview only the board's annual report
  4. DRecompute depreciation on bank furniture

Explanation

Fictitious or mule accounts show patterns such as rapid in-and-out movement, reactivation of dormant accounts and shared identifiers across unrelated accounts. Data-analytic exception reports on these indicators target the risk directly; the other steps are unrelated to account misuse.

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