CEP Ltd., a manufacturing company, has a diverse range of suppliers for raw materials and components. Several new suppliers have been added during…

Ways in which fraud can be committed through suppliers' ledger are- (i) Adjusting fictitious or duplicate invoices as purchases in the accounts of suppliers and subsequently misappropriating the amounts when payments are made to the suppliers in respect of these invoices. (ii) Suppressing the credit notes issued by suppliers and withdrawing the corresponding amounts not claimed by them. (iii) Withdrawing amounts unclaimed to suppliers, for one reason or another by showing that the same has been paid to them. (iv) Accepting purchase invoices at prices considerably higher than their market prices and collecting the excess amount paid in cash, from the suppliers. CA K will ensure that the following procedures are adopted to investigate potential fraud: that the Purchase Journal should be vouched by reference to entries in the Goods Inward Book and the suppliers' invoices to confirm that amounts credited to the accounts of suppliers were in respect of goods, which were duly received, and the suppliers' accounts had been credited correctly.All the suppliers should be requested to furnish statements of their accounts to see whether or not any balance is outstanding or due so as to confirm that allowances and rebates given by them have been correctly adjusted and were duly authorized by the authorized person/ officer.Examine the system of internal control in relation to purchase orders issued and identify possibilities of collusion with suppliers.