Which of the following is a red flag in source documents that might indicate embezzlement through manipulation of those documents?

• A. Missing source documents
• B. Payees on source documents do not match entries in the general ledger
• C. Receipts or invoices lack professional quality
• D. Duplicate payment documents for different transactions

Answer: (A)

The key idea is that the evidence trail from source documents must be intact for a transaction to be trustworthy. When source documents are missing, there’s no independent record to confirm what actually happened, who authorized it, and where the funds went. That absence creates a perfect opening for someone to alter numbers, fabricate transactions, or hide embezzled funds because there’s nothing to compare against the records in the general ledger or to support reconciliation. In other words, missing originals undermine the entire audit trail and heighten the opportunity for concealment.

Other indicators can point to problems—if payees don’t match the general ledger, it suggests posting or vendor-name inconsistencies; invoices that look unprofessional can raise suspicion of fabricated or altered documents; and duplicate payment documents for different transactions can indicate fraud patterns. But the lack of source documents directly compromises evidence and is the most fundamental warning sign of potential manipulation.