TIAPS Module 1 Audit and Assurance workbook

B.3 Threats to Independence and Objectivity
Threats to independence and objectivity occur when the requirements described in B.1 are
not in place or are under strain. An appearance of a lack of independence or a conflict of
interest can be just as much of an impairment as something more concrete.
Threats to independence may arise for the following reasons:
• The head of internal audit reports functionally to a senior manager with responsibility
for activities to be audited who tries to limit the scope or influence the findings of an
audit.
• The internal audit function’s resources are determined by a senior manager with
responsibility for activities to be audited who tries to limit the scope or influence the
findings of an audit.
• The head of internal audit has or has had recent responsibility for activities to be
audited by members of the internal audit function.
• The head of internal audit has limited access to the governing body to discuss any
topics of interest or concern freely without the presence of management who might
otherwise inhibit or deflect such discussions.
• The internal audit charter, approved by the governing body, specifically restricts the
internal audit function’s access to areas the governing body considers to be
“unimportant” or “too sensitive.”
Threats to objectivity may arise for the following reasons:
• Self-interest. The auditor stands to gain personally from a particular outcome of the
audit.
• Adverse interest. The auditor stands to lose personally from a particular outcome of
the audit.
• Duress: The auditor in some other way is under pressure to conduct or conclude the
audit in a particular way.
• Familiarity. The auditor is overly acquainted with the activity under review through
recent or extensive involvement.
• Self-review. The auditor is reviewing an area for which they have or have recently
had significant influence.
• Management participation. The auditor is responsible for the activity under review or
managers who are responsible are involved in undertaking parts of the audit.
• Advocacy threat. The auditor is acting or has recently acted as an advocate for those
responsible for the activity under review.
• Undue influence. The auditor in some other way has too much influence over the
activity, perhaps by virtue of close relationships.
• Lack of competence: The auditor may not be sufficiently skilled or experienced to
apply the necessary professional skepticism, open-mindedness, and disciplined
approach to ensure findings and recommendations are objective.
• Lack of independence of the internal audit function: The auditor is part of an internal
audit function whose independence is compromised.
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