Forensic Accounting Procedures for Fraud Related to Purchasing

One of the major rules of a forensic accountant is investigating fraud that happened or might be happened to the organizations.

In this article, we will list down some specific procedures related to Investigating Fraud over purchasing done by Forensic Accountant.

Here we go!

In every organization, the purchasing department plays a very important rule in the business process as almost all of the business operating expenses as well as core operating expenses have to be gone through this department.

Operating expenses are normally majors’ part of expenses in the organizations, and frauds have most likely happened here.

Do so core operating expenses like the purchase of raw materials would also be the highest expenses in the company. All of these two types of expenses are sensitive and fraud would normally happen.

Procedure for Forensic Accounting in Fraud:

If you are performing the Forensic Accounting involve with Investing Fraud in purchasing, the following procedure might help you.

  • Use of computer technique: Computer Assistant Auditing Technique is a very important tool could help you identify some unusual transaction; for example, identifying payment to unauthorized suppliers which made by the accounting or finance department. You can use a list of authorized suppliers for this technique. Fraud might have happened with unauthorized suppliers.
  • Review the price per invoice again the prices provided by the supplier in authorize suppliers list. Doing so you might found some invoices have united prices higher than the authorized price.
  • Reviewing the paid invoice back to the authorization list and back to goods received notes. You might find some invoices paid without receiving goods.
  • Vacant some purchasing officer and replace it with the new one for the specific period.
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I hope the above could help you with some ideas to list down your procedures in investigating fraud if you are forensic accounting or Forensic Auditors.