TIAPS Module 1 Audit and Assurance workbook

B.4 Safeguards for Independence and Objectivity
In accordance with Standard 1110 – Organizational Independence, “the chief audit executive
must confirm to the board, at least annually, the organizational independence of the internal
audit activity.” 34 If there is interference in determining scope, performing work, or
communicating results, “the chief audit executive must disclose such interference to the
board and discuss the implications.” 35
Certain safeguards to avoid or limit impairments to independence and objectivity and to
reduce the threat of impairment to an acceptable level are specified in Standard 1130 –
Impairment to Independence or Objectivity. These include:
• Internal auditors should not provide assurance for operations for which they were
responsible within the previous year.
• Assurance engagements for areas over which the head of internal audit has
responsibility should be overseen by a party outside of the internal audit function.
• Caution is required where auditors previously provided advisory services to ensure
this does not impair objectivity in an assurance engagement.
There are specific requirements when the head of internal audit is asked to assume
additional responsibilities that may impair independence and/or objectivity. Standard 1112 –
Chief Audit Executive Roles Beyond Internal Auditing states the following:
The chief audit executive may be asked to take on additional roles and responsibilities
outside of internal auditing, such as responsibility for compliance or risk management
activities. These roles and responsibilities may impair, or appear to impair, the
organizational independence of the internal audit activity or the individual objectivity of
the internal auditor. Safeguards are those oversight activities, often undertaken by the
board, to address these potential impairments, and may include such activities as
periodically evaluating reporting lines and responsibilities and developing alternative
processes to obtain assurance related to the areas of additional responsibility. 36
To identify impairments, it is necessary to consider the perspectives of stakeholders. The
appearance of impropriety can undermine trust. Close relationships with individuals do not
automatically weaken an internal auditor’s professionalism but can create an impression or
even an expectation of bias or “friendly” reporting. The same is true of strong familiarity with
an area of responsibility or activity. An auditor may well be capable of making an objective
assessment, but others may regard the audit work with some skepticism. Regular reminders
and training for internal auditors regarding independence and objectivity are important.
Requirements for maintaining independence and objectivity can also be reinforced through
policies, procedures, audit manuals, templates, and so on.
34
The International Professional Practice Framework, The Institute of Internal Auditors, 2016
35
The International Professional Practice Framework, The Institute of Internal Auditors, 2016
36
The International Professional Practice Framework, The Institute of Internal Auditors, 2016
39