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CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques

During a review at Kaveri Textiles Ltd, the internal auditor notices that the purchase manager has not taken any leave for four years and personally handles all vendor onboarding and payment approvals. Which red flag does this pattern most directly indicate?

It is a behavioural red flag. An employee who never takes leave and controls vendor onboarding and payments alone may be hiding irregularities that a replacement would uncover. It signals risk and calls for further inquiry, but it does not by itself prove fraud.

  1. ABehavioural red flag of reluctance to delegate or take leave, which may conceal fraudCorrect
  2. BEvidence of effective segregation of duties
  3. CA routine sign of high employee engagement with no risk implication
  4. DA proven case of vendor collusion requiring immediate prosecution

Explanation

Refusing leave and retaining sole control over vendor onboarding and payments is a classic behavioural red flag, because fraud often needs the perpetrator's continuous presence to stay hidden. It is only an indicator, not proof. Treating it as proven collusion overstates what the red flag shows.

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