Skip to content

CS Professional · Internal and Forensic Audit · Emerging Issues and Challenges

Meera Auto Components Ltd's internal auditor, using analytics on payroll, finds 12 employees sharing the same bank account number and no attendance records for them for six months. Some managers argue that sample-based testing last year found nothing. Which statement best explains why the earlier result does not contradict the present finding?

Sample-based tests can miss concentrated or hidden irregularities like ghost employees, whereas full-population analytics, such as matching duplicate bank accounts against attendance, can expose them. So a clean sample last year provides only limited assurance and is not inconsistent with the present finding.

  1. ASampling always gives the same result as full-population testing
  2. BSample tests can miss concentrated or hidden irregularities such as ghost employees, which full-population analytics can exposeCorrect
  3. CData analytics is only valid when sampling has already found exceptions
  4. DPayroll fraud cannot be detected by internal audit

Explanation

Small sample sizes may not include rare, clustered items like ghost employees, so a clean sample gives limited assurance. Full-population analytics such as duplicate-field matching can surface them. The other statements are incorrect: sampling does not guarantee equal results and analytics does not depend on prior sample exceptions.

Did you get it right without looking?

One question tells you little. A timed set on Emerging Issues and Challenges shows your real accuracy, how long you take and where you lose marks.

Practise Emerging Issues and ChallengesFree diagnostic mock

More Emerging Issues and Challenges questions