Upon Discovering Fraud, Internal Auditors

question 20

Multiple Choice

Upon discovering fraud, internal auditors:

• A) must fully investigate it and determine perpetrators, value, damage, and recommend possible action.
• B) should only continue their investigation if the fraud is in the present or immediately previous period.
• C) have an obligation to notify management or the board of directors when the incidence of significant fraud has been established to a reasonable degree of certainty.
• D) must provide the audit committee and the board of directors with a preliminary written statement detailing the known facts and presenting reasonable suspicions as to perpetrators, values, methods, and time periods affected.

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Definitions:

Crisis Management

The process by which an organization deals with a disruptive and unexpected event that threatens to harm its operations or stakeholders.

Crisis Situation

An emergency condition that poses a significant threat or requires immediate attention and action.

Structured Problems

Issues that are easily defined and have a clear, standardized solution procedure.

Systematic Decisions

Choices made based on a process that involves examining all available data, considering alternatives, and selecting the most suitable option in an organized manner.