FOR2601
Assignment 1 Semester 2 2025
Unique Number:
Due Date: 1 September 2025
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
, +27 67 171 1739
QUESTION 1
1.1 Detection techniques used by auditors to detect fraud
Auditors play a vital role in detecting fraud, and to do this effectively they must apply
flexible and adaptable techniques. One of the most common methods is recognising
red flags. These are warning signs or unusual behaviours that suggest something
might be wrong. Red flags can be behavioural, such as employees showing signs of
excessive wealth or resisting audits, transactional, such as vague supplier details or
ghost employees on payroll, or system-related, like repeated failed logins. Corporate
red flags also exist, for example, unusual secrecy by management or frequent failed
acquisitions. Detecting these indicators early allows organisations to follow up before
fraud becomes serious.
Another important method is using whistle-blower mechanisms. Anonymous
hotlines, ethics lines, or reporting channels allow employees or the public to report
fraud or misconduct without fear of retaliation. These channels are effective because
they give access to information that would otherwise remain hidden.
Auditors also rely on suspicious activity reporting systems. For example, systems
can flag unusual payments, inconsistent supplier relationships, or abnormally high
transactions. With advances in technology, data analysis tools can now identify
patterns or anomalies that would not be noticed manually.
In addition, process controls are vital in fraud detection. These include segregation
of duties, mandatory vacations, and checks on procurement or financial reporting
processes. If properly implemented, they help prevent fraud and make irregularities
more visible when they occur.
Finally, auditors increasingly use proactive fraud detection procedures. These
include continuous monitoring of transactions, data mining, and corporate health
checks. Unlike reactive methods, proactive procedures aim to identify potential fraud
before it escalates.
In summary, no single method is sufficient. A combination of red flag recognition,
whistle-blower systems, suspicious activity reports, internal controls, and proactive
detection measures ensures auditors are well-equipped to detect fraud in
organisations.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is"
without any express or implied representations or warranties. The author accepts no responsibility or
liability for any actions taken based on the information contained within this document. This document is
intended solely for comparison, research, and reference purposes. Reproduction, resale, or transmission
of any part of this document, in any form or by any means, is strictly prohibited.
Assignment 1 Semester 2 2025
Unique Number:
Due Date: 1 September 2025
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
, +27 67 171 1739
QUESTION 1
1.1 Detection techniques used by auditors to detect fraud
Auditors play a vital role in detecting fraud, and to do this effectively they must apply
flexible and adaptable techniques. One of the most common methods is recognising
red flags. These are warning signs or unusual behaviours that suggest something
might be wrong. Red flags can be behavioural, such as employees showing signs of
excessive wealth or resisting audits, transactional, such as vague supplier details or
ghost employees on payroll, or system-related, like repeated failed logins. Corporate
red flags also exist, for example, unusual secrecy by management or frequent failed
acquisitions. Detecting these indicators early allows organisations to follow up before
fraud becomes serious.
Another important method is using whistle-blower mechanisms. Anonymous
hotlines, ethics lines, or reporting channels allow employees or the public to report
fraud or misconduct without fear of retaliation. These channels are effective because
they give access to information that would otherwise remain hidden.
Auditors also rely on suspicious activity reporting systems. For example, systems
can flag unusual payments, inconsistent supplier relationships, or abnormally high
transactions. With advances in technology, data analysis tools can now identify
patterns or anomalies that would not be noticed manually.
In addition, process controls are vital in fraud detection. These include segregation
of duties, mandatory vacations, and checks on procurement or financial reporting
processes. If properly implemented, they help prevent fraud and make irregularities
more visible when they occur.
Finally, auditors increasingly use proactive fraud detection procedures. These
include continuous monitoring of transactions, data mining, and corporate health
checks. Unlike reactive methods, proactive procedures aim to identify potential fraud
before it escalates.
In summary, no single method is sufficient. A combination of red flag recognition,
whistle-blower systems, suspicious activity reports, internal controls, and proactive
detection measures ensures auditors are well-equipped to detect fraud in
organisations.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is"
without any express or implied representations or warranties. The author accepts no responsibility or
liability for any actions taken based on the information contained within this document. This document is
intended solely for comparison, research, and reference purposes. Reproduction, resale, or transmission
of any part of this document, in any form or by any means, is strictly prohibited.
