Under that doctrine, the organization is responsible for the wrongful acts of its employees. The Guidelines come into effect if cases are tried in federal court. Federal jurisdiction could occur if federal moneys are involved, goods are transported across state lines, the mail system is used, if computer transmissions and telephone calls cross state lines. The last prosecution statistics I saw were in September, 1996. Copies of all internal audit reports are sent to State Audit and the Tennessee Board of Regents.
State auditors use the reports to help evaluate internal control.
Auditing standards require them to consider the internal control structure. The State auditors can limit their testing if the area has been covered by Internal Audit. Yes, for frauds of a material nature. They must plan the audit to provide reasonable assurance of detecting material irregularities. Failure to do this carries legal liability.