17. The chief of an organization’s

17. The chief of an organization’s security received an anonymous call accusing a marketing manager of taking kickbacks from a media outlet. Thus, the marketing department is on the list of possible engagement clients for the coming year. The internal audit activity is assigned responsibility for investigating fraud by its charter. If obtaining access to outside media outlet records and personnel is not possible, the best action an internal could take to investigate the allegation of marketing kickbacks is to
A. Search for unrecorded liabilities from media outlets.
B. Obtain a list of approved media outlets.
C. Develop a financial and behavioral profile of the suspect.
D. Vouch any material past charge-offs of receivables.
Answer (C) is correct.
REQUIRED: The best action an internal auditor can take to investigate an allegation of kickbacks.
DISCUSSION: A common indicator of fraud by an employee is an unexplained change in his or her financial status. A standard of living not commensurate with the employee's income may signify wrongdoing. The employee's behavior may also be suspicious (for example, constant association with, and entertainment by, a member of the media outlet's staff). The profile may help to corroborate illegal income and thereby provide a basis for tracing illegal payments to the employee.
Answer (A) is incorrect. If the employee is taking kickbacks, unrecorded liabilities are not being created.
Answer (B) is incorrect. A list of approved media outlets would not provide any information about kickbacks.
Answer (D) is incorrect. The receipt of kickbacks would have no effect on accounts receivable.