When testing a sample of payroll records during an engagement, an internal auditor suspects mat fraud has been committed. What should be the next step?
A.
The auditor should increase the sample size to determine the extent ol the fraud.
B.
The suspicions should be communicated to the chief audit executive.
C.
The testing should be completed with the results reported in the final audit report.
D.
A fraud investigator should examine the evidence and report back to the auditor.
If fraud is suspected, it is crucial to follow the organization’s protocol for reporting such suspicions. The chief audit executive should be informed so that appropriate steps can be taken, including involving fraud investigators if necessary. References:
IIA Standard 1210.A2: Internal auditors must have sufficient knowledge to identify indicators of fraud.
IIA Practice Guide: Internal Auditing and Fraud.
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