Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 112

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 determine whether fraud exists?

Answer options

• A. Switch the existing assurance engagement into a fraud investigation engagement.
• B. Extend the audit scope and perform additional testing of controls on other related areas.
• C. Review the prior year's transaction volume and amounts paid compared to the prior year's budget.
• D. Perform data analytics on the supplier's information, invoiced amounts, and payments performed.

Correct answer: D

Explanation

The correct answer is D because performing data analytics allows the auditor to identify patterns or anomalies in supplier transactions that may indicate fraudulent activity. The other options may provide additional context or information but do not directly analyze the transaction data to detect fraud as effectively as data analytics would.