An internal auditor observes a double payment transaction on a supplier invoice during an accounts payable engagement. Which of the following steps would be the most effective in helping the auditor…

Question

Options

• ASwitch the existing assurance engagement into a fraud investigation engagement
• BExtend the audit scope and perform additional testing of controls on other related areas
• CReview the poor year's transaction volume and amounts paid compared to the poor year's budget
• DPerform data analytics on the supplier's information, invoiced amounts, and payments performed

• A
  14% (5)
• B
  3% (1)
• C
  8% (3)
• D
  76% (28)

Explanation

The most effective step in helping the auditor determine whether fraud exists after observing a double payment transaction on a supplier invoice is to perform data analytics on the supplier's information, invoiced amounts, and payments performed. Data analytics allows the auditor to systematically analyze large volumes of transactions to identify patterns, anomalies, and potential fraudulent activities. This approach is more comprehensive and effective in uncovering fraud than simply extending the audit scope or switching to a fraud investigation engagement without a thorough initial analysis.

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