The internal audit activity is responsible for conducting fraud investigations. A potential fraud instance was identified during an audit engagement. The chief audit executive appoints a lead…

Question

Options

• AAsk internal auditors to gather all relevant information and evidence.
• BIdentify and interview witnesses first and potential suspects later.
• CConduct a fraud risk assessment to identify the most vulnerable areas.
• DDetermine the competencies needed and assess whether team members have a conflict of

• A
  3% (1)
• B
  72% (23)
• C
  16% (5)
• D
  9% (3)

Explanation

In fraud investigations, the standard protocol is to identify and interview witnesses before suspects - witnesses provide objective context and establish facts without alerting the suspect, which preserves evidence integrity and prevents the suspect from concealing or destroying information.

Why the distractors are wrong:

• A is premature - broadly gathering all information without a structured approach risks tipping off the suspect and lacks focus; evidence gathering follows a prioritized, methodical plan.
• C is out of sequence - a fraud risk assessment is a preventive tool done during normal audit planning, not a reactive step after a specific fraud instance has already been identified.
• D has merit (assessing team competencies and conflicts of interest is important), but it happens before any investigative action begins - typically right after the investigator is appointed, not as the next step after appointment.

Memory tip: Think of it as a two-ring approach - start with the outer ring (witnesses = objective, less risky) before moving to the inner ring (suspects = subjective, higher stakes). Interviewing witnesses first builds your factual foundation and prevents the suspect from being tipped off prematurely.

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