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CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing

While testing expense claims at Himalaya Pharma Ltd, an internal auditor finds several claims just below the Rs 10,000 approval limit, submitted by one manager, with sequential receipt numbers from different restaurants. What is the most appropriate immediate step?

The auditor should extend testing of that manager's claims, preserve the evidence and escalate under the fraud response policy. Claims kept just under the approval limit and sequential receipts from different restaurants are red flags. Ignoring them as small or confronting the manager first would be improper.

  1. AExtend testing on that manager's claims, preserve evidence and escalate per the fraud response policyCorrect
  2. BClose the finding as immaterial since each claim is small
  3. CConfront the manager and demand repayment before reporting
  4. DDelete the sample and choose another manager

Explanation

Split claims below an approval limit and sequential receipts from different vendors are fraud red flags. The auditor should expand testing, preserve evidence and report through the defined escalation channel. Ignoring it because of small amounts ignores the pattern, and confronting the manager first risks evidence tampering and breaches protocol.

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