Final answer:
Internal auditors should possess enough knowledge to identify fraud indicators but are not expected to have the expert skills of a fraud investigator. Their main role encompasses the evaluation of risk management processes, and they may face ethical challenges when reporting internal wrongdoing.
Step-by-step explanation:
The responsibility of the internal auditor with respect to fraud involves having sufficient knowledge to identify the possible indicators of fraud. Internal auditors are expected to have an understanding of fraud risks and the ability to recognize signs that fraud might be occurring. While they are not expected to be experts in fraud detection like forensic specialists, they should have enough training to detect irregularities and the knowledge to initiate further investigation if needed. However, it is crucial to recognize that an internal auditor's primary role is not solely to detect and investigate fraud, but also to evaluate and improve the effectiveness of risk management, control, and governance processes.
Despite this defined role, internal auditors often face ethical dilemmas, as reporting corruption or criminal behavior within an organization can lead to personal repercussions, including the possibility of termination. This conflict highlights the underlying tension internal auditors may encounter between professional duties and the potential costs of exposing wrongdoing.