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CS Professional · Internal and Forensic Audit · Fraud Detecting Techniques

While reviewing the accounts payable ledger of Gokul Retail Ltd, a forensic auditor finds a vendor whose address matches that of an employee in the purchase department. Which fraud scheme is most likely suspected?

A shell or fictitious vendor billing scheme with an undisclosed conflict of interest is suspected. When a supplier's address matches a purchase employee's address, the employee may be billing the company through a controlled entity. Matching vendor and employee master data is the standard detection technique.

  1. AShell or fictitious vendor billing scheme involving a conflict of interestCorrect
  2. BCash skimming at the retail counter
  3. CLapping of receivables
  4. DChannel stuffing at year end

Explanation

A vendor sharing an address with a purchasing employee suggests a fictitious or related vendor used for fraudulent billing. Skimming and lapping concern receipts from customers, and channel stuffing concerns revenue inflation, so they do not fit.

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