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

While using generalised audit software on the payroll file of Kaveri Engineering Ltd, the internal auditor finds that two employees share the same bank account number but have different employee codes. What is the most appropriate next step?

Treat the match as an exception and investigate it using HR records and bank details, then report if unresolved. Software output only flags anomalies; it is not proof of fraud, and the auditor must not alter records or ignore it because totals agree.

  1. AConclude that fraud has occurred and report to the police
  2. BDelete one record from the payroll master to correct the file
  3. CIgnore it because the payroll total agrees with the ledger
  4. DTreat it as an exception, investigate with HR and bank records, and report findings if unresolvedCorrect

Explanation

CAAT output only identifies exceptions, which may have a valid explanation such as family members. The auditor must investigate with corroborating evidence before concluding. Altering records is outside the auditor's role, and agreement of totals does not rule out ghost employees.

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