Which of the following indicates that internal audit independence may be compromised?
A.
The internal auditor maintains a close personal relationship with operational management.
B.
Material observations were intentionally left out of the audit report.
C.
Internal auditors assigned to the audit engagement did not have the knowledge, skills, and competencies needed to perform their responsibilities.
D.
An internal auditor failed to apply professional skepticism while performing audit tests in an area overseen by an experienced, reputable manager
The Answer Is:
B
This question includes an explanation.
Explanation:
Intentionally leaving out material observations from the audit report clearly indicates a compromise in the independence of the internal audit. Independence is fundamental to the credibility of the audit function, and any actions that suggest altering audit reports to omit significant findings undermine this principle. Such behavior may suggest an effort to avoid conflict or negative reactions from management, directly impacting the objectivity and integrity of the audit results.
Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)
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