Which of the following is most likely to impair the internal audit activity's independence?

Question

Options

• AUndertaking audit work in an area where internal auditors lack the necessary skills.
• BEstablishing an internal audit activity without documented policies and procedures.
• CAssigning compliance responsibilities to the chief audit executive.
• DConcluding that an internal control is effective without first obtaining evidence

• A
  2% (1)
• B
  13% (6)
• C
  81% (38)
• D
  4% (2)

Explanation

Assigning compliance responsibilities to the chief audit executive (CAE) directly impairs independence because the CAE would then be auditing functions they are operationally responsible for - a textbook self-review threat that violates the principle of organizational independence. Option A describes a competence issue (a skills/proficiency problem), not an independence problem. Option B is a documentation deficiency that affects quality and governance, but does not inherently compromise independence. Option D represents a failure of professional skepticism and evidence-gathering - a serious audit quality flaw, but again not an independence issue.

Memory tip: Independence = freedom from conflicts of interest. Ask yourself: "Is the auditor auditing their own work or responsibilities?" If yes, independence is impaired. Competence, documentation, and evidence failures are quality problems - independence failures arise when the auditor has a stake in the outcome.

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