Skip to content

CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques

Before using generalised audit software on the payroll file of Bharat Steels Ltd, a forensic auditor wants to detect ghost employees. Which procedure is the most effective first step for ensuring a reliable result?

The best first step is to validate the extract by reconciling record counts and control totals to the payroll register and ledger, then match employee master data with HR records and bank details. This ensures the data is complete and accurate, making ghost-employee detection reliable.

  1. ARun the software directly on the file provided by the payroll manager and report any exceptions
  2. BReconcile the extracted file's record count and total to the payroll register and general ledger, then match employee master data to HR records and bank accountsCorrect
  3. CSelect a random sample of ten employees and verify their attendance
  4. DCompute the ratio of salary to sales and compare with industry average

Explanation

Data integrity must be established before analysis: completeness and accuracy of the extract are confirmed through control totals reconciled to source records. Then employee master data is matched with HR records and bank accounts to expose ghost employees such as duplicate accounts. Running software on an unverified file risks flawed conclusions, and small samples or aggregate ratios cannot reliably find ghosts.

Did you get it right without looking?

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

Practise Fraud Detecting TechniquesFree diagnostic mock

More Fraud Detecting Techniques questions