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CS Professional · Internal and Forensic Audit · Basic Concepts of Forensic Audit

During an engagement at Sundaram Pharma Ltd., a forensic auditor finds that the CFO, who appointed her, appears involved in diverting funds. What is the ethically appropriate course of action?

The forensic auditor should report findings objectively to those charged with governance, such as the audit committee, even though the CFO appointed her. Integrity and objectivity forbid suppressing facts or allowing the implicated person to control the report.

  1. ADrop the CFO's name from the working papers to avoid conflict with the client
  2. BReport the findings objectively to those charged with governance, such as the audit committee, without bias or suppressionCorrect
  3. CDiscuss the findings first only with the CFO and let him decide the content of the report
  4. DStop the work and return the fees without recording or reporting anything

Explanation

Objectivity and integrity require the auditor to report facts to the appropriate governance level, here the audit committee, regardless of who appointed her. Suppressing or letting the suspect shape the report breaches integrity and risks tipping off the suspect.

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