Which of the following will help the chief audit executive (CAE) of a large organization...

Board approval of the internal audit budget and resource plan strengthens organizational independence because it reduces management’s ability to restrict internal audit through financial or staffing pressure. Effective functional reporting to the board includes board oversight of the internal audit mandate, plan, budget, resources, CAE appointment and removal, and CAE remuneration. The CAE develops the charter, but the board—not the CAE alone—must approve it. Similarly, allowing the CEO to control appointment or termination of the CAE could undermine independence by making the CAE dependent on executive management. The board is not normally required to approve every individual internal auditor’s salary package. Therefore, board approval of the internal audit function’s overall budget and resource plan is the option that most directly supports and protects organizational independence.