ABC Pharmaceuticals Ltd., a listed company, is under forensic investigation following the resignation of its statutory auditors. The auditors cited concerns over financial irregularities. An internal audit revealed the f

CS Professional · Internal and Forensic Audit · PYQS · December 2025
ABC Pharmaceuticals Ltd., a listed company, is under forensic investigation following the resignation of its statutory auditors. The auditors cited concerns over financial irregularities. An internal audit revealed the following: Multiple vendor payments just under the ₹ 10 lakh approval threshold. Repetitive vendor invoice amounts ending in specific digits. Round-number expense reimbursements from a group of employees. Suspicious fund transfers through group companies to offshore accounts and back to related parties (possible layering). Email evidence of backdated invoices and manipulated purchase orders. As a forensic auditor, answer the following questions: What data analytics techniques can be used to detect anomalies or collusion in Employee Reimbursements ?

Answer & Explanation:

Data Analytics Techniques to detect anomalies or collusion in employee Reimbursement Trend Analysis: Identify spikes or unusual reimbursement patterns over time. Benford's Law: Analyze leading digits of expense claims. Cluster Analysis: Group employees by similar claim behaviors or vendors. Duplicate Testing: Flag multiple identical claims (e.g., same amount, date, or expense type). Outlier Detection: Flag the reimbursements which are significantly higher than average. Goal: Identify anomalies, repetitive claims, or collusion between employees and vendors.

Topics: Forensic Audit Techniques

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