While doing an inquiry for Gold Company, Neon, the external auditor assigned, noted that the company$/$s payroll staff asslaned to distribute checks to the employees also has access to create and approve new efolovee records in the system. Upon doing a preliminary investigation, Neon discovered fictitious employee records approved by the payroll staff which might mean that then is a

Conduct further investigation to understand the nature of the act and gather information to determine possible effects on the financial statements.

Set up a meeting with the payroll staff and confront them about the assue of misaporophation. This will be efficient for the audit and will speed up the process of investigation.

Discuss the situation with legal authorities outside the erganization. This my be effective in acprising firm managonant of possible legal ramifications.

Withdraw from the audit engagement immediately. This will avoid potential damage to the reputation of the audit firm.