Which step should an internal auditor complete during fieldwork to detect fraudulent activities during an...

During fieldwork, examining outlier cash payments for inconsistencies and discrepancies is a direct fraud-detection procedure. Unusual amounts, recipients, timing, frequencies, account combinations, or authorization patterns may represent red flags requiring further investigation. Brainstorming possible fraud schemes is primarily a planning activity used to identify fraud risks before detailed testing begins. Developing procedures to identify an employee who processed a known fraudulent payment presumes that fraud has already been established and moves toward investigation. Recommending segregation of duties is a corrective or control-improvement action normally made after evaluating control weaknesses. Fieldwork focuses on obtaining and analyzing evidence to determine whether identified risks have materialized. Accordingly, testing anomalous cash payments is the procedure most directly designed to detect potentially fraudulent transactions during the audit.