Audit Techniques and Fraud Investigation) Computer-assisted audit techniques can be useful to the auditor in investigating alleged fraud.

Required:

Following is a list of scenarios in which fraud is suspected. Briefly indicate how the auditor might use some of the computer audit techniques discussed in this chapter to assist in the fraud investigation. Use the following format:

Note: More than one technique might be used in each situation. If more than one approach is applicable, identify all the approaches and briefly indicate which approach you believe is preferable, along with the rationale for your choice.
Potential Fraud Scenarios:

a. A computer operator is processing sales transactions with an unauthorized version of the sales program. The unauthorized version was changed by a programmer who agreed to split one-half of the profits with the computer operator. The unauthorized program invoices products to three customers (all owned by or affiliated with the programmer) at approximately one-third of normal sales prices.
The programmer’s companies resell the goods at normal price and make a substantial profit on the sales.

b. A social services worker has processed fictitious recipients and generates checks to them, which she then picks up and cashes.

c. A bank programmer has programmed the interest rate application to add daily interest to her account at the rate of 0.5 percent each day. This amounts to an interest rate of over 200 percent per year. The error apparently occurs only on the programmer’s account.

d. An unauthorized employee in accounts payable has gained access to the pricing table that controls the prices for all merchandise processed by the automated cash register at the retailer. The employee changes prices for selected goods, goes to the store and purchases the goods, and changes the prices back the next morning.

e. The payroll manager has implemented an unauthorized wage increase for all employees in the paint department of a manufacturer. The manager’s brother, sister in-law, and two friends work in the six-member department. The increase is approximately 25 percent of the authorized wage rate.

f. An unauthorized individual has gained access to the computer program of a telephone company. The program is used to order repair parts for delivery to specific locations on the following day for use in repairs. The amount of goods requested has increased sharply over time.

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a. AR b. etc. Computer Audit Technique Description of Use