When a potential fraud instance is identified, the chief audit executive (CAE) appoints a lead investigator to manage the investigation. The next critical step is to determine the competencies needed for the investigation and assess whether the team members have any conflicts of interest. This ensures that the investigation team has the appropriate skills, knowledge, and objectivity to handle the case effectively. Ensuring there are no conflicts of interest is vital to maintain the integrity and credibility of the investigation process.
References:
* IIA Practice Guide: Internal Auditing and Fraud
* IIA Standard 1210: Proficiency
* IIA Standard 1120: Individual Objectivity

The most effective risk management strategy for a manufacturer experiencing regular fluctuations in the price of electrical power, which impacts the bottom line, would be to use a forward contract for bulk power purchases. This strategy allows the manufacturer to lock in power prices for a future period, thus reducing the risk associated with price volatility and providing more predictable cost planning.References: Risk management strategies in operations and finance, as discussed in business management and internal auditing literature, which advocate using financial instruments like forward contracts to hedge against price fluctuations.

Section: Volume B