Which of the following statements is the most appropriate for a chief audit executive to include in the internal audit policy manual in order to promote objectivity?

Question

Options

• AInternal auditors may conduct a financial effectiveness engagement in a business unit at any point
• BInternal auditors may conclude that a business unit's current control environment is adequate and
• CInternal auditors may conduct an engagement in a business unit at any point after providing a
• DInternal auditors should limit the scope of an engagement if they become aware of a potential

• A
  15% (9)
• B
  8% (5)
• C
  3% (2)
• D
  74% (45)

Explanation

Objectivity requires action, not just awareness. Option D is correct because the IIA Standards (specifically Standard 1130) require that when internal auditors become aware of a potential impairment to objectivity - such as a conflict of interest - they must take concrete steps, including limiting or withdrawing from the engagement. Simply continuing without restriction would compromise the credibility and integrity of the audit.

Why the distractors fail:

• A is wrong because allowing auditors to conduct engagements "at any point" with no conditions ignores situations where prior involvement or personal relationships could bias the auditor.
• B is wrong because pre-concluding that a control environment is "adequate" suggests a predetermined outcome, which is the opposite of objectivity - conclusions must follow evidence.
• C is wrong because merely providing a disclosure before conducting an engagement does not eliminate the conflict; disclosure is necessary but insufficient on its own to restore objectivity.

Memory tip: Think of objectivity as a firewall, not a disclaimer. Options A, B, and C all allow the engagement to proceed despite red flags (no restrictions, premature conclusions, or disclosure alone). Option D actually stops or constrains the work when objectivity is threatened - which is what a policy manual promoting true objectivity must require.

No community discussion yet for this question.