ADMIN
[COMPANY NAME]
, QUESTION 1 1.1 Discuss in your own words the detection
techniques that can be used by auditors to detect fraud in an
organisation. (10) 1.2 Discuss the basic considerations or tactical
steps you have to consider when starting a new investigation. (10)
[20]
1.1 Detection Techniques Used by Auditors to Detect Fraud in
an Organization
Auditors use a variety of techniques to detect fraud within an
organization. These techniques can be broadly categorized into
analytical, substantive, and investigative approaches. Here are
some key detection techniques:
1. Analytical Procedures: Auditors perform ratio analysis,
trend analysis, and other statistical analyses to identify
unusual variances and patterns that may indicate fraudulent
activity. For example, significant changes in financial ratios
or unexpected trends can prompt further investigation.
2. Data Mining and Analysis: Using software tools, auditors
can analyze large datasets to identify anomalies and patterns
that suggest fraudulent transactions. This can include looking
for duplicate payments, round-dollar amounts, or transactions
occurring at unusual times.
3. Reconciliation: Auditors reconcile various accounts to
ensure that records are accurate and complete. Discrepancies
in reconciliations can point to potential fraud. For instance,
reconciling bank statements with the general ledger can
reveal unauthorized withdrawals or deposits.
4. Substantive Testing: Detailed examination of transactions
and balances to verify their validity. This includes
