The audit engagement objective is to identify vendors who might be involved in money laundering processes or tax evasion schemes. How would the internal auditor use data analytics to fulfill this objective?
A.
Run reports listing all payments made in countries other than vendor locations
B.
Run reports listing all credit limit overrides
C.
Run reports listing all instances of delayed revenue recognition
D.
Run three-way match reports, matching invoices, purchase orders, and receiving reports
One red flag for money laundering and tax evasion is when payments are routed to locations that differ from vendor headquarters or registration. Running reports on payments made to countries outside vendor locations (A) can highlight potentially suspicious transactions.
Credit overrides (B) relate to credit risk, not money laundering.
Delayed revenue recognition (C) relates to earnings manipulation.
Three-way matches (D) test procurement accuracy but not fraud schemes of this type.
Therefore, the most relevant analytic technique is Option A, which directly targets anomalies that suggest offshore routing, shell companies, or tax avoidance schemes.
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