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CS Professional · Internal and Forensic Audit · Internal Audit Tools and Techniques

Internal auditors at Himalaya Retail Ltd use data analytics on 2 lakh vendor payments. The tool flags payments of identical amount to the same vendor with the same invoice number on different dates. Which fraud-detection test is being applied, and what does it chiefly target?

This is a duplicate payment test. It matches vendor, invoice number and amount across different dates to detect the same invoice being paid twice, through error or fraud. Benford's law and gap detection examine digit patterns and missing sequences respectively, not repeated payments.

  1. ADuplicate payment test; targets double payment of the same invoiceCorrect
  2. BBenford's law test; targets round-sum manipulation
  3. CGap detection test; targets missing cheque numbers
  4. DRatio analysis; targets declining gross margin

Explanation

Matching amount, vendor and invoice number across dates is a duplicate test, aimed at double payments, whether by error or fraud. Benford's law examines leading-digit frequency, and gap detection finds missing sequence numbers, which are different tests.

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