© D.L. Crumbley
When Fraud Is Discovered
Notify management or the board when the incidence of significant fraud has been established to a reasonable certainty.
If the results of a fraud investigation indicate that previously undiscovered fraud materially adversely affected previous financial statements, for one or more years, the internal auditor should inform appropriate management and the audit committee of the board of directors of the discovery.
A written report should include all findings, conclusions, recommendations, and corrective actions taken.
A draft of the written report should be submitted to legal counsel for review, especially where the internal auditor chooses to invoke client privilege.