Which of the following actions by the chief audit executive (CAE) best describes a potential...

A management-imposed budget reduction that forces the CAE to reduce engagement scope can impair organizational independence because management is indirectly restricting internal audit’s ability to determine and perform the work necessary to address significant risks. Resource limitations become an independence concern when they materially interfere with audit coverage or scope. Rescheduling an engagement because key personnel are unavailable may be a reasonable administrative adjustment when it does not prevent necessary work. Providing remuneration benchmarking information to the board does not inherently impair independence. Similarly, prioritizing critical assurance engagements over lower-priority advisory work can represent appropriate risk-based resource management by the CAE. Therefore, the significant concern is senior management imposing a financial constraint that results in reduced audit scope, potentially limiting internal audit’s ability to fulfill its responsibilities objectively and comprehensively.