Question

An internal auditor's field work uncovers a series of transactions that indicate a possible embezzlement. Which of the following actions should the chief audit executive take?

A. Discuss the case with the board.
B. Decide whether to recommend an investigation.
C. Confront the suspected embezzler to determine that the facts are correct.
D. Review the finding with the suspect's fellow workers to see whether the workers can furnish additional evidence.

Answer 1

The chief audit executive should conduct a discreet investigation into possible embezzlement, maintain confidentiality, and follow the company's established fraud protocols without discussing the issue with the suspect's fellow workers to avoid compromising the investigation.

Step-by-step explanation:

When an internal auditor discovers transactions suggesting embezzlement, the chief audit executive should not review the findings with the suspect's fellow workers as this may compromise the investigation and could lead to collusion or workplace conflict. The professional approach entails conducting a discreet and thorough investigation, maintaining confidentiality, and following the organization's established protocols for handling fraudulent activities.

Typically, the chief audit executive would need to escalate the issue to the audit committee or relevant authority within the company's corporate governance structure. They may also cooperate with legal counsel to determine the next steps, which could include further investigation, notifying law enforcement, and taking appropriate actions to secure company assets. It is crucial to ensure that any response is measured, appropriate, and in accordance with both internal policy and legal requirements.