F
, OR2601 Assignment 1 (COMPLETE ANSWERS) Semester 2
2024 (234942) - DUE 10 August 2024 ; 100% TR
US
. 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 for Fraud
Auditors use various techniques to detect fraud in an organization. Here are some
key methods:
1. Analytical Procedures: This involves analyzing financial statements and
ratios to identify unusual patterns or discrepancies. For instance, a sudden
increase in expenses without a corresponding increase in revenue might
signal fraudulent activity.
2. Internal Controls Review: Auditors examine the organization's internal
control systems to ensure they are robust and functioning as intended. Weak
or inadequate controls can increase the risk of fraud.
3. Data Mining and Forensic Analysis: Auditors use specialized software to
analyze large volumes of data and identify anomalies, such as unusual
transactions or patterns that might indicate fraudulent activities.
4. Sampling Techniques: By selecting and examining a sample of transactions
or records, auditors can identify potential fraud indicators. This can be more
manageable than reviewing every single transaction.
5. Interviews and Observations: Conducting interviews with employees and
observing their behavior can help auditors gather information about potential
fraud. Employees might reveal discrepancies or irregularities in their
statements or actions.
6. Surveillance: In some cases, auditors might use surveillance techniques to
observe the behavior of employees, especially if there is a suspicion of fraud
involving physical assets or cash.
7. Whistleblower Hotlines: Encouraging employees to report suspicious
activities anonymously can help detect fraud early. Auditors might review
reports from these hotlines for potential leads.
8. Document Examination: Reviewing and verifying documents such as
invoices, contracts, and receipts can help auditors identify forged or falsified
documents.
, OR2601 Assignment 1 (COMPLETE ANSWERS) Semester 2
2024 (234942) - DUE 10 August 2024 ; 100% TR
US
. 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 for Fraud
Auditors use various techniques to detect fraud in an organization. Here are some
key methods:
1. Analytical Procedures: This involves analyzing financial statements and
ratios to identify unusual patterns or discrepancies. For instance, a sudden
increase in expenses without a corresponding increase in revenue might
signal fraudulent activity.
2. Internal Controls Review: Auditors examine the organization's internal
control systems to ensure they are robust and functioning as intended. Weak
or inadequate controls can increase the risk of fraud.
3. Data Mining and Forensic Analysis: Auditors use specialized software to
analyze large volumes of data and identify anomalies, such as unusual
transactions or patterns that might indicate fraudulent activities.
4. Sampling Techniques: By selecting and examining a sample of transactions
or records, auditors can identify potential fraud indicators. This can be more
manageable than reviewing every single transaction.
5. Interviews and Observations: Conducting interviews with employees and
observing their behavior can help auditors gather information about potential
fraud. Employees might reveal discrepancies or irregularities in their
statements or actions.
6. Surveillance: In some cases, auditors might use surveillance techniques to
observe the behavior of employees, especially if there is a suspicion of fraud
involving physical assets or cash.
7. Whistleblower Hotlines: Encouraging employees to report suspicious
activities anonymously can help detect fraud early. Auditors might review
reports from these hotlines for potential leads.
8. Document Examination: Reviewing and verifying documents such as
invoices, contracts, and receipts can help auditors identify forged or falsified
documents.
