FOR2601
ASSIGNMENT 1
DUE DATE: APRIL 2026
, FOR2601 ASSIGNMENT 1 SEMESTER 1 2026
DUE APRIL 2026
Question 1
1.1 Discuss in your own words the detection techniques that can be used by
auditors to detect fraud in an organisation.
According to the study guide, auditors can employ several techniques to detect
fraud, which can be categorised as process controls and proactive fraud detection
procedures. Process controls are specifically designed to detect fraudulent activity
and include methods such as reconciliations, independent reviews, physical
inspections and counts, and detailed analyses (Chapter 3, p. 63). These are
standard checks that can highlight discrepancies.
Proactive fraud detection procedures involve the use of more advanced techniques
like data analytics. Data analytics, also referred to as data mining or digital analysis,
involves the use of technology to identify anomalies, trends, and risk indicators within
large volumes of transactional data . This can help auditors uncover hidden
relationships between people, organisations, or events, and identify suspicious
transactions that might otherwise go unnoticed. A key part of this is continuous
auditing, which is the use of data analytics on a continuous or real-time basis,
allowing for the rapid identification and reporting of fraudulent activity (Chapter 3, p.
64).
Auditors are trained to recognise "red flags," which are indicators of a potential
problem. These red flags can be behavioural (e.g., an employee living beyond their
means), transactional e.g., unusual payments to tax havens, or systemic e.g., audit
logs being turned off) (Chapter 3, p. 51-52). The use of anonymous reporting
mechanisms, such as whistle-blower hotlines, also serves as a crucial detection
technique by providing a channel for employees to report suspected wrongdoing.
1.2 Discuss the basic considerations or tactical steps you have to consider
when starting a new investigation.
ASSIGNMENT 1
DUE DATE: APRIL 2026
, FOR2601 ASSIGNMENT 1 SEMESTER 1 2026
DUE APRIL 2026
Question 1
1.1 Discuss in your own words the detection techniques that can be used by
auditors to detect fraud in an organisation.
According to the study guide, auditors can employ several techniques to detect
fraud, which can be categorised as process controls and proactive fraud detection
procedures. Process controls are specifically designed to detect fraudulent activity
and include methods such as reconciliations, independent reviews, physical
inspections and counts, and detailed analyses (Chapter 3, p. 63). These are
standard checks that can highlight discrepancies.
Proactive fraud detection procedures involve the use of more advanced techniques
like data analytics. Data analytics, also referred to as data mining or digital analysis,
involves the use of technology to identify anomalies, trends, and risk indicators within
large volumes of transactional data . This can help auditors uncover hidden
relationships between people, organisations, or events, and identify suspicious
transactions that might otherwise go unnoticed. A key part of this is continuous
auditing, which is the use of data analytics on a continuous or real-time basis,
allowing for the rapid identification and reporting of fraudulent activity (Chapter 3, p.
64).
Auditors are trained to recognise "red flags," which are indicators of a potential
problem. These red flags can be behavioural (e.g., an employee living beyond their
means), transactional e.g., unusual payments to tax havens, or systemic e.g., audit
logs being turned off) (Chapter 3, p. 51-52). The use of anonymous reporting
mechanisms, such as whistle-blower hotlines, also serves as a crucial detection
technique by providing a channel for employees to report suspected wrongdoing.
1.2 Discuss the basic considerations or tactical steps you have to consider
when starting a new investigation.
