Persuasive Evidence Indicates That a Member of Senior Management Has

Multiple Choice

Persuasive evidence indicates that a member of senior management has been involved in insider trading that would be considered fraudulent. However, the evidence was encountered during an operational audit and is not considered relevant to the audit. Which of the following is the most appropriate action for the chief audit executive to take?

A) Report the evidence to external legal counsel for investigation. Report the legal counsel findings to management.
B) Report the evidence to the chairperson of the audit committee and recommend an investigation.
C) Conduct sufficient audit work to conclude whether fraudulent activity has taken place, then report the findings to the chairperson of the audit committee and to government officials if appropriate action is not taken.
D) Discontinue audit work associated with the insider trading since it is not relevant to the existing audit.