Question

In verifying the capital asset records of the electric utility department, Jean Hanson, staff auditor of a city’s internal audit department, noted that several trucks and pieces of equipment were out of service and apparently un-repairable.
Therefore, they should have been written off. She described and documented her conclusions in her working papers. When she discussed her findings with the manager in charge of the engagement, the manager indicated that she was aware of the problem since it had been raised in previous years. Moreover, she had already discussed it with the internal auditor (the head of the department), and both had agreed that this was not the year to make the required write-off. A large write-off would cause considerable embarrassment to the city manager, the mayor, and members of the city council, all of whom had recently defended the electric utility department against charges that it was mismanaged. Further, the budget of the internal audit department was coming up for consideration before the city council.
Jean Hanson had reason to believe that the working paper in which she described her findings was removed from the audit binder.



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  • CreatedAugust 13, 2014
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