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CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques

At Narmada Foods Ltd, a forensic auditor matches the employee master file with the vendor master file and finds a vendor whose bank account number and address are identical to those of a payroll employee in the purchase department. This is best described as which detection approach, and what scheme does it indicate?

This is data matching across databases. Cross-checking employee and vendor master files revealed identical bank account and address, which indicates a likely conflict of interest or a fictitious vendor scheme operated by an insider, and should be investigated further.

  1. AData matching across databases; a possible conflict of interest or fictitious vendor schemeCorrect
  2. BPhysical verification; a possible inventory shortage
  3. CAnalytical review of margins; possible overstatement of revenue
  4. DCut-off testing; possible window dressing of year-end sales

Explanation

Comparing fields such as bank accounts and addresses across master files is data matching, a standard data analytic technique. A match between a vendor and an employee points to a related-party or fictitious vendor scheme. The other options relate to different procedures and risks.

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