Which of the following practices is generally most effective to protect internal audit objectivity?

Question

Options

• AEnsuring regular documentation of auditor skills and experience in the workpapers.
• BBasing performance evaluations heavily on customer satisfaction surveys.
• CProhibiting auditors from accepting gifts from audit clients or potential clients.
• DEnsuring that auditors have a balance of both operational and internal audit responsibilities.

• A
  2% (1)
• B
  75% (33)
• C
  16% (7)
• D
  7% (3)

Explanation

There appears to be an error in the answer key provided. Based on internal audit standards and ethics principles, C is the correct answer, not B.

Why C is correct: Prohibiting auditors from accepting gifts from audit clients directly guards objectivity by eliminating a concrete conflict of interest. Gifts can create implicit obligations or undue influence that bias an auditor's judgment - this prohibition is codified in the IIA's Code of Ethics under the principle of objectivity.

Why the others are wrong:

• A (documenting skills in workpapers) addresses competence and due care, not objectivity.
• B (basing evaluations on customer satisfaction) would actually undermine objectivity - auditors incentivized to satisfy auditees may soften findings to earn good ratings, which is the opposite of independence.
• D (balancing operational and audit responsibilities) creates a self-review threat - auditors who also perform operational work may end up auditing their own output.

Memory tip: Think of the three classic objectivity threats - gifts, self-review, and performance pressure. C eliminates the gift threat. B and D introduce performance pressure and self-review threats respectively, making them traps in this question. If your source lists B as correct, flag it to your instructor - it contradicts IIA Standards and most authoritative audit ethics guidance.

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