Task $13$: Ethics & Fraud Whilst performing the recruitment and payroll audit, the chief audit executive $($CAE$)$ sent you the following email: TO:$$ AUDITOR FROM:$$ CAE SUBJECT:$$ ETHICAL DILEMMAS AT UKHIA $($Urgent$!)$ DATE:$$ Today Good day AUDITOR I know you are currently extremely busy with the recruitment and payroll audits, but I urgently need your assistance with the following events that took place in the internal auditing landscape $($I am not mentioning names, but these are real$).$ As you know, we as UKHIA are all aware of the Institute of Internal Auditors$($IIA$)$ Code of Ethics that forms part of the International Professional Practices Framework $($IPPF$)$ and what the $$right$$ thing is to do$.$ However, based on the three events listed below, it appears as if auditors these days don$$t know any more or maybe they are being intimidated by management.....please help! I also know that an ethical dilemma refers to a situation where the distinction between $$right$$ and $$wrong$$ behaviours are blurred $($grey areas$)$ and this is a huge risk to us as UKHIA. We don$$t want our auditors to be guilty of unethical conduct. This will bring serious reputational damage to our standing in the organisation and internal audit profession. Thank you very much for your assistance. Chief Audit Executive CAE PS: I have not used auditors$$ or divisions$$ real names for confidentiality purposes, but I think if we find auditors in our department behaving unethically, we should $$name and shame$...$ what do you think? Event $1$: It was discovered that auditor A has been pressurised by the senior on the audit $($auditor B$)$ into signing off the audit program for a section of the audit work assigned to him, although he has not completed the work, so that the budget for the audit can be met. When he $($auditor A$)$ protested, the senior informed him that should he not do as he was told, he $($auditor A$)$ would receive a very poor rating at his next performance assessment. Event $2$: Auditor C discovered a few questionable transactions involving payments to ghost employees. These ghost employees were all previously employed by hospital D$,$ one of the hospitals within the Ukuthu group. Their services were terminated, but the human resources practitioner at organisation D$,$ a relative of the auditor$-$in$-$charge of the audit, decided to $$re$-$appoint$$ these employees as part$-$time consultants. She requested them to submit monthly claims for hours $$worked$$ which she personally approved to ensure prompt payment. The auditor$-$in$-$charge, auditor E suggested that auditor C removes the working papers documenting the fictitious salary payments and promptly removed auditor C from the audit team. Event $3$: Auditor F received a request from the procurement division of organisation H $($also within the Ukuthu group$)$ to perform a high $-$level forensic investigation. Due to a staff shortage, auditor F will be the only auditor conducting the investigation. Although he recently passed all the examinations to qualify as a certified fraud examiner $($CFE$),$ he has never conducted any forensic investigations. Auditor F decided to attend a continuing professional development course in forensic auditing as soon as the investigation at organisation H has been completed. Required $1.$ Prepare a report to the CAE with detailed comments on each of the three $(3)$ dilemmas raised in his email. Your comments $/$ responses should address the following: a$.$ Indicate whether the internal auditors$$ actions $/$ proposed actions are in violation of the Code of Ethics or not. b$.$ Identify the ethical principle$($s$)$ violated. c$.$ Briefly describe the specific rule of conduct and related attribute standard $($if applicable$).$ d$.$ Recommend an appropriate course of action. $2.$ Comment on the CAE$$s note he made in the PS: line in your report. Also identify and discuss at least two $(2)$ other $$ethics controls$$ that an internal audit department can implement to promote ethical behaviour amongst internal audit staff. $3.$ List typical fraudulent activities that could occur in Ukuthu Payroll process