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Circle of Trust Scenario
You get into the circle of trust by doing things that let the employees know they can confide in you, without retaliation. As great as it all seems, if an employee knows that their biggest risk is losing their source of income, they're not going to confide, no matter how much they trust you. The auditor needs to let employees know that their identity will be protected to the utmost extent possible, which will immediately begin building the circle of trust. Today's times are tough for many people and the salaries at various jobs are lower than they have been in the past. For an employee to begin talking about wrongdoing, they need to know they'll still have a job, and more so, they need to know they'll still have a job where they won't be continually harassed for talking to the auditor about wrongdoing that's taking place.
What types of evidence would you need to determine whether someone has intentionally or unintentionally committed fraud? As an auditor for Franken's Markets, you have discovered fraudulent activities. In your previous discussions with management. No one with the Franken organization identified fraudulent behavior or activity, and any questions relating to such matters were met with defensive behavior. How would you address this situation? Describe the role that the objective setting process plays in how and if auditing objectives are met. What are some steps you can take to ensure that you consistently meet the objectives of an audit?
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