When an audit committee should open a formal case
Signals that informal inquiry has reached its limit and a tracked anti-fraud engagement is warranted.
Informal inquiry has a place. A controller can ask why a suspense account grew. An internal auditor can sample a vendor. Formal case tracking becomes necessary when:
- The same allegation resurfaces after an informal look-away.
- A person in the allegation chain still has write access to the records under review.
- External auditors or regulators have asked whether an investigation is underway.
- Potential loss size would matter to disclosure judgements.
- Management and the audit committee disagree on whether anything improper occurred.
At that point, continuing without a case identifier, evidence log, and independence check puts the board at risk of a messy narrative later. Opening a case does not mean assuming guilt. It means accepting that the matter needs a file capable of surviving counsel and, if needed, authorities.
Ai Processnet’s intake call is designed for this threshold decision: sometimes we recommend a fraud risk assessment instead of a full investigation; sometimes we say the facts already justify case AF-xxxx. Either answer is better than another month of undocumented hallway conversations.