During an audit of an organization's accounts payable area, an internal auditor identified anomalies in the information examined that may indicate potential fraud. Which test should the auditor…

Question

Options

• AVerify the completeness and integrity of the data being analyzed.
• BIdentify duplicated organizational transactions.
• CAnalyze all transactions within the targeted area.
• DCheck control totals that have may have been falsified.

• A
  12% (4)
• B
  3% (1)
• C
  79% (26)
• D
  6% (2)

Explanation

Analyzing all transactions within the targeted area (C) is the correct first step because once anomalies signaling potential fraud are detected, the auditor must establish the full scope of the problem before drawing conclusions or running targeted tests - a partial view could miss additional fraudulent activity or misrepresent the pattern.

Why the distractors are wrong:

• A (verifying data completeness/integrity) is a preliminary data-quality step that should occur before analysis begins, not after anomalies have already been identified through that data.
• B (identifying duplicate transactions) is a useful specific fraud test, but performing it first is premature - you'd be applying a narrow technique before understanding the broader picture.
• D (checking falsified control totals) is similarly a targeted test for a specific fraud method; doing it first assumes the nature of the fraud before the full investigation is conducted.

Memory tip: Think "wide before narrow." Fraud investigation follows a funnel - first examine all transactions to map the scope, then drill into specific tests like duplicates or falsified totals. The auditor who narrows too early risks tunnel vision and missing the full extent of the scheme.

No community discussion yet for this question.