Question

b. What should an auditor do if they find duplicate invoice payments?

c. How might an auditor search for invoice payments where the invoice number may have been falsified or altered?

When an auditor finds vendor addresses that are post office boxes, what should be done with this information?

Answer 1

c.)

Falsified invoicing frauds are not particularly sophisticated but it is difficult to keep them going for a long period of time without detection. When an employee creates a false invoice (as opposed to re-submitting a legitimate invoice), many ‘red flags’ may be present, such as:

• The company name listed on the invoice is not a registered company;
• No physical address is listed (do not solely rely on email addresses);
• The contact information listed on the invoice may not be legitimate. i.e. the PO Box number or telephone number might not actually exist;
• Incorrect/invalid dates may be present, such as 31 February 2013 for example;
• Invalid GST numbers or incorrectly formatted GST numbers;
• The GST value on the invoice may be incorrectly calculated;
• Often a very brief description is listed that is insufficient to adequately detail the goods or services being invoiced, such as “services as requested” or “supply goods as requested”;
• Casual or sloppy grammar, spelling mistakes etc;
• No tax invoice details;
• No remittance details; and
• The invoice is created using Microsoft Word.

It is important to emphasise this this list is not exhaustive, rather it represents the more common attributes of false invoices that were presented by employees in fraud cases that Deloitte has investigated. If 1 or 2 of these attributes alone are present, it may not necessarily mean that the invoice is false, however it would be prudent for the employer to make further enquiries into the legitimacy of the invoice before making payment (such as by checking if the company exists by phoning the contact telephone number listed, or by checking the validity of the GST number; or by requesting further documentation to support the goods or services being invoiced).