what will internal audit do if detected fraud?

Answer 1

Follow the code of corporate governance, statutory requirements and other requirements like the stock exchange listing, federal and state provisions, the said event is reported to the highest level available in management to adhere to compliance thereof (1) to retain public confidence. (2)(a)(b)(c)(d)

A sufficiently large company would report this to an independent non-executive Director or the next higher independent persons in authority on an audit committee.

Failing which, the Directors, followed by the Finance Director, Group Accountant, in that order.

Large and matured or well run companies (3) may have other whistle blowing channels to avoid conflicts of interest and prevent snubbing when the event is discovered. (Speculatively, Hewlett-Packard has some serious cleaning up to do.)

In the event of a suspected large scale defrauding with plausible reason, the state police and/or white collar crimes investigation services may be required, on and above the appointment of independent auditors specialising in forensics accounting.(4)(5)(6)

Prior to the whistle blowing event, circumstantial evidence must be verified with the parties involved by staff discovering the fraud. This is to ensure and reduce the likelihood of incorrect cause-effect attribution, that the said parties did commit the deed. On the spot out right accusations are uncalled for as concrete evidence is required in court proceedings, obtained by special investigations and reviewed at a higher level.

Notes:
Independent non-executives are not involved in the daily operations of the company, are rarely salaried, and reports to all the share holders of the companies and regulatory bodies. They are people in a fiduciary position due to the duties they are charged with.

Answer 2

they will report to the board directors