CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing
An internal auditor at Yamuna Retail Ltd uncovers indications of a possible cash misappropriation by a store manager while performing a routine audit. Which action concerning reporting is most appropriate?
The auditor should promptly report the indications to the designated senior authority or audit committee under the fraud reporting policy, keeping the matter confidential and preserving evidence. Confronting the suspect, gossiping with staff or waiting for exact quantification risks tipping off and loss of evidence.
- AReport the indications promptly to the designated senior authority or audit committee as per the fraud reporting policy, without confronting the suspectCorrect
- BConfront the store manager immediately and ask for a confession before reporting
- COmit the matter from the report until the amount is fully established
- DDiscuss the suspicion with other store staff to gather opinions
Explanation
Suspected fraud should be escalated promptly through the channel set by the fraud policy, preserving evidence and confidentiality. Confronting the suspect or involving staff can tip off the person and destroy evidence. Delaying until the amount is certain defeats timely reporting.
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