According to NA guidance, which of the following conditions would enhance the independence of the internal audit activity?

Question

Options

• AThe organizational culture rewards critical and objective thinking.
• BThe quality of work performed by the internal audit activity is periodically reviewed,
• CThe organization establishes effective governing body oversight,
• DAudit assignments are rotated among internal audit staff

• A
  5% (1)
• B
  5% (1)
• C
  71% (15)
• D
  19% (4)

Explanation

Option C is correct because, per IIA Standards, independence is fundamentally an organizational/structural attribute - the internal audit activity's independence is enhanced when the governing body (e.g., board or audit committee) provides oversight, protects the function from management interference, and controls decisions around resources, charter, and reporting lines.

• A is wrong because a culture that rewards critical thinking supports individual objectivity, not structural independence. Culture influences mindset, not organizational positioning.
• B is wrong because periodic quality reviews (QA/QI programs) measure quality and conformance with standards - they assess how well the activity performs, not whether it is free from undue influence.
• D is wrong because rotating assignments among staff reduces familiarity threats to individual auditor objectivity, but it doesn't change the audit activity's structural position relative to management.

Memory tip: Think of independence vs. objectivity as Structure vs. State of Mind. Independence is about where the audit function sits (governed by the board = independent). Objectivity is about how individual auditors think (unbiased mindset). Whenever a choice describes behavior, culture, or individual actions, it's likely addressing objectivity - not independence.

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