Suspecting fraud, the chief financial officer (CFO) asked the internal audit activity to investigate a significant increase in travel related expenditures. Work was performed by a qualified internal auditor. Following the completion of the engagement, the chief audit executive (CAE) reported to the CFO that no violations were found and no fraud had occurred.
According to the Standards, which of the following principles did the CAE violate?
Due professional care requires that internal auditors perform their duties with the requisite level of diligence, skill, and thoroughness. Given the situation involving suspected fraud, the CAE's immediate conclusion that no violations were found and no fraud had occurred without seeking additional expert help suggests a lack of due professional care. This principle emphasizes the necessity of conducting comprehensive investigations, especially when specialized knowledge is required, such as in fraud detection and investigation.
Why is the answer not D- organisational independence
And why not C. Proficiency? According to 1210.A2 – Internal auditors must have sufficient knowledge to evaluate the risk of fraud and the manner in which it is managed by the organization, but are not expected to have the expertise of a person whose primary responsibility is detecting and investigating fraud.
A. Because the CAE concluded immediately that no fraud has occurred despite that help from fraud examiner was not sought
Organisational Independence is not part of ethical standards/principles.