If an internal auditor suspects fraud during an engagement which of the following is expected of the auditor?

If an internal auditor suspects fraud during an engagement which of the following is expected of the auditor?
A . Evaluate the suspected activities to determine whether a forma! investigation is warranted,
B . Immediately inform senior management and the board of the suspected fraud.
C . Ascertain the level of resources needed to formally investigate the fraud, and proceed with the investigation if resources permit,
D . Include in the engagement documentation all possible effects and the potential impact of the fraud to the organization

View Answer

Answer: A

Explanation:

If an internal auditor suspects fraud during an engagement, the expected action is to evaluate the suspected activities to determine whether a formal investigation is warranted. This step is crucial as it ensures that suspicions are substantiated before escalating the issue, thereby maintaining the integrity and objectivity of the internal audit process. This approach aligns with the IIA’s guidance on handling fraud, including assessing and responding to risks of fraud during audit engagements.

Reference: The Institute of Internal Auditors (IIA) – International Standards for the Professional Practice of Internal Auditing