Which of the following tests would most likely help discover a fictitious invoice?

Question

Options

• ACompare vendor addresses to employee addresses.
• BMatch cancelled checks to invoices.
• CSearch for duplicate payment amounts.
• DCheck employee bank records against invoice amounts.

• A
  13% (9)
• B
  77% (54)
• C
  3% (2)
• D
  7% (5)

Explanation

Matching cancelled checks to invoices (B) is the most direct test for fictitious invoices because it traces each payment back to its supporting documentation - a fictitious invoice lacks a corresponding purchase order, receiving report, or other evidence of a real transaction, exposing the fraud. When an auditor pulls the cancelled check and can't tie it to legitimate business documentation, that gap signals a potentially fabricated invoice.

Why the distractors fall short:

• A (compare vendor to employee addresses) detects shell company fraud where an employee poses as a vendor, but a fraudster can easily use a PO box or unrelated address, making this less reliable as a primary test.
• C (search for duplicate payment amounts) targets duplicate payments, not fictitious ones - a fabricated invoice is typically paid once, so it wouldn't surface here.
• D (check employee bank records) is legally invasive, not a standard audit procedure, and only works after you've already identified a suspect.

Memory tip: Think "B for Backup documentation - match checks to invoices to find ones with no backup." Fictitious invoices can't survive scrutiny of the full payment trail.

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