An internal auditor discovered that a former colleague from the internal audit activity now works in a junior position in a department scheduled for an upcoming audit. How can the auditor best…

Question

Options

• ARecommend mat the chief audit executive outsource the upcoming audit engagement
• BProceed with the audit engagement in accordance with the internal audit manual
• CIncrease the amount of fieldwork in order to build greater credibility for audit conclusions
• DDeclare a conflict of interest and hand over the engagement to another auditor

• A
  5% (2)
• B
  71% (30)
• C
  10% (4)
• D
  14% (6)

Explanation

Option B is correct because a former colleague working in a junior position in the audited department does not automatically constitute a conflict of interest - the auditor simply needs to apply professional judgment and follow the internal audit manual, which contains established objectivity safeguards. IIA Standards require disclosure only when independence or objectivity is actually impaired, and a routine prior workplace relationship with a junior staff member typically falls below that threshold if the auditor can still form unbiased conclusions.

Why the distractors fail:

• A (outsource): Outsourcing is a disproportionate response to a minor association; it's not warranted unless there is a genuine, documented impairment that the internal team cannot mitigate.
• C (increase fieldwork): More fieldwork addresses the appearance of rigor, not the auditor's actual objectivity - this conflates quantity of evidence with independence of judgment.
• D (declare conflict and hand over): This would be appropriate if the relationship created a real threat to objectivity (e.g., close friendship, supervisory history), but a former colleague in a junior role doesn't automatically rise to that level.

Memory tip: Think "proportionality" - the response to a potential objectivity threat should match its severity. Junior former colleague → follow the manual and stay objective. Close personal relationship → disclose and consider reassignment.

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