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CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques

During a review at Kaveri Textiles Ltd, the forensic auditor notices that the purchase manager has not taken leave for three years and personally handles all vendor onboarding and payments. Which of the following does this pattern most directly represent?

This is a behavioural red flag signalling possible fraud risk. An employee who never takes leave and controls vendor onboarding and payments alone is concentrating duties, which warrants further inquiry, though it does not by itself prove that fraud has happened.

  1. AA behavioural red flag indicating possible fraud riskCorrect
  2. BConclusive proof that a fraud has occurred
  3. CA normal sign of strong internal control
  4. DAn error of principle in the books of account

Explanation

Refusal to take leave and exclusive control over a process are classic behavioural red flags. A red flag only signals heightened risk and calls for further inquiry; it is not proof of fraud. It also shows weak segregation of duties, so it cannot be viewed as strong control.

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