The chief audit executive (CAE) is drafting the annual internal audit plan and seeks input from senior management and the external auditor prior to submitting it for approval to the board. According…

Question

Options

• AThe CAE's actions are likely to impair the Independence of the internal audit activity.
• BThe CAE acted appropriately, and the independence of the internal audit activity was not
• CThe CAE should have developed the audit plan without outside influence to maintain objectivity.

• A
  7% (4)
• B
  76% (44)
• C
  17% (10)

Explanation

Option B is correct because IIA Standards (specifically Standard 2010) explicitly require the CAE to seek input from senior management and the board when developing the annual audit plan, and coordination with external auditors is also encouraged to minimize duplication. Gathering input does not compromise independence - independence is threatened only when outside parties control audit decisions, not when the CAE consults them as part of a sound planning process.

Option A is wrong because consulting stakeholders is a required best practice, not an impairment. Independence would be at risk if senior management or the external auditor were dictating which areas to audit or overriding the CAE's professional judgment - that is not what happened here.

Option C is wrong because it confuses objectivity (unbiased judgment) with isolation (no outside contact). Objectivity means the CAE makes impartial decisions; it does not mean the CAE must develop the plan in a vacuum. Ignoring stakeholder input would actually be a planning deficiency.

Memory tip: Think "Input ≠ Control." The CAE owns the final plan - seeking input is required; surrendering control is what impairs independence.

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