CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques
While reviewing payroll at Himalaya Foods Ltd, an internal auditor finds several employees sharing the same bank account number and no leave records for them. Which fraud type do these red flags most likely point to?
These red flags point to ghost employee fraud. Several payees sharing one bank account and having no leave records suggest fictitious employees on payroll, with salaries being diverted to a single person. The auditor should verify identity and attendance of these employees.
- AGhost employee fraudCorrect
- BInventory obsolescence
- CBank reconciliation timing difference
- DForeign exchange translation error
Explanation
Multiple payees on one bank account and absence of leave or attendance records are standard indicators of fictitious employees on the payroll. The other options do not explain shared accounts with missing personnel records.
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