On the completion of your BAccounting degree, you realised that you would prefer to

specialise in internal auditing. You then completed all the required examinations and

joined the Institute Internal Auditors $($IIA$).$

After you became a member of the IIA you joined a firm called Unite Finance $($Pty$)$ Ltd

$($Unite$).$ Unite makes life easy by supplying fast online unsecured loans to their

customers and they have a call center situated in Bellville.

You have been appointed to ensure all application procedures are followed before a

loan is granted and to ensure the amounts paid out agree to the approved amount.

You work amongst a team of five Internal Auditors.

One of the Internal Auditors informed you of the following:

He detected an error in the granting of loans to fictitious customers. These loans were

paid into the bank accounts of two Call Center Agents. The Call Center Agents

approved these fictitious loans and then paid the funds into their respective personal

bank accounts. This appears to be a regular occurrence as he has already detected

three of these payments after only investigating two financial months$$ payments to

customers regarding approved loans. When he approached the Call Center Agents

and enquired from them, they proposed an agreement to him by offering him a

payment of $40\%$ of each fictitious payment in return for his silence on the matter. He

agreed and cannot wait for his first payment.

$11$ HAUD$332-1-$Jan$-$Jun$2023-$SA$1-$MS$-$V$4-09052023$

REQUIRED:

Based on the above scenario, discuss whether the behavior of the Internal Auditor is

in line with the code of ethics.