Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 98

Which of the following techniques would best detect an inventory fraud scheme?

Answer options

• A. Analyze invoice payments just under individual authorization limits
• B. Analyze stratification of inventory adjustments by warehouse location
• C. Analyze inventory invoice amounts and compare with approved contract amounts
• D. Analyze differences discovered during duplicate payment testing

Correct answer: D

Explanation

The correct answer, D, is effective because duplicate payment testing can reveal inconsistencies that suggest fraudulent activity. Options A, B, and C, while useful for general inventory analysis, do not directly address the detection of inventory fraud as effectively as analyzing differences in duplicate payments.