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CS Professional · Internal and Forensic Audit · Internal Audit of Specific Functions

In a payroll audit at Meridian Pharma Ltd, the auditor uses data analytics on the monthly payroll file. Which result would be the strongest red flag for a possible fraudulent salary diversion, warranting immediate follow-up?

Different employee IDs being paid into one bank account, without an HR-approved explanation, is the strongest red flag. It is a typical indicator of ghost employees or diverted salaries. Common department codes, approved increments and varied joining dates are normal and need no urgent follow-up.

  1. ASeveral employees share the same department code
  2. BSalaries of different employee IDs being credited to the same bank account number, with no family or HR-approved explanationCorrect
  3. CSalary cost rising by the approved annual increment percentage
  4. DEmployees having different dates of joining

Explanation

Duplicate bank account numbers across distinct employee IDs are a classic indicator of ghost employees or diversion of pay to one person. Shared department codes, approved increments and varied joining dates are normal. The auditor should trace the accounts to HR records and the approving authority.

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