The chief audit executive (CAE) has hired a new internal auditor who was immediately assigned to a procurement function audit. Because the new auditor's name is similar to that of the procurement…

Question

Options

• ATake no action, as there is no impairment to independence.
• BRemove the new internal auditor from the engagement team.
• CDiscuss the matter with the appropriate personnel to alleviate concerns.
• DClosely supervise the new auditor and carefully review his work.

• A
  78% (18)
• B
  4% (1)
• C
  13% (3)
• D
  4% (1)

Explanation

Option A is correct because independence is only impaired when a real condition exists - such as an actual financial interest, personal relationship, or prior involvement - that could affect objectivity. A mere similarity in names, when no actual relationship exists, creates no genuine threat to the auditor's ability to perform the engagement objectively.

Why the distractors are wrong:

• B (Remove the auditor) is an overreaction - removal is warranted only when an actual impairment exists, not a staff misconception based on coincidental name similarity.
• C (Discuss with personnel) sounds reasonable but would legitimize a false perception as if it were a real concern, potentially undermining the auditor's credibility without cause.
• D (Close supervision) implies the CAE has genuine doubts about the auditor's objectivity when none are warranted; supervision level should be driven by competency and experience, not unfounded rumors.

Memory tip: Think of it as the "REAL test" - does the threat to independence reflect something Real, Existing, and Actual, or is it Legend (rumor/misperception)? Only real impairments require action. A shared surname pattern is legend, not fact.

No community discussion yet for this question.