Independence of the Internal Audit Activity (IAA)

Question 1

Independence and Objectivity

Answer 1

the IAA must be independent, and internal auditors must be objective in performing their work

Question 2

Dual Reporting to Achieve Independence

Answer 2

Achieving independence through reporting to the board:

1. Functional Reporting
2. Administrative reporting

Question 3

Functional Reporting

Answer 3

1. approving the internal audit charter
2. approving the risk-based internal audit plan
3. approving the internal audit budget & resource plan
4. Receiving communications from CAE on the internal audit activity’s performance relative to its plan and other matters
5. approving decisions regarding the appointment and removal of the CAE
6. approving the remuneration of the CAE
7. making appropriate inquiries of management and the CAE to determine whether there are inappropriate scope of resource limitations

Question 4

Dual Reporting relationship

Answer 4

CAE works with the board and senior management to determine organizational placement.

Question 5

Administrative reporting

Answer 5

CAE reports an administrative reporting line to senior management, specifically reporting to the CEO