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CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques

At Sagar Engineering Ltd, the forensic team compares the vendor master file with the employee master file and finds a vendor whose bank account number and address match those of a payroll employee in the stores department. Which technique has the team applied, and what does the match primarily suggest?

The team used data matching, comparing the vendor and employee master files on common fields. A vendor sharing a bank account and address with an employee suggests a fictitious vendor or a concealed related-party conflict, which calls for detailed investigation of payments made to it.

  1. AData matching, suggesting a possible fictitious or related-party vendorCorrect
  2. BRatio analysis, suggesting a liquidity problem
  3. CVouching, suggesting an arithmetical error
  4. DCircularisation, suggesting a cut-off error

Explanation

Cross-matching two databases on common fields such as bank account and address is data matching. A vendor sharing details with an employee points to a shell vendor or undisclosed conflict of interest. Ratio analysis, vouching and circularisation are different procedures and do not describe this comparison.

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