II. The purpose of internal auditing
III. Profession guidance on independence and objectivity
IV. Consulting services: a challenge to audit independence?
V. Independence vs. Objectivity
The internal auditor occupies a unique position he or she is employed by the management but is also expected to review the conduct of management which can create significant tension since the internal auditor's independence from management is necessary for the auditor to objectively assess the management's action, but the internal auditor's dependence on the management for employment is very clear.'
-------Institute of Internal Auditors (IIA)
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b) Under the general direction of executive management, it is the subordinate line manager's responsibility to manage the operation and achieve the objectives and desired outcomes established by the board and the members of executive management.
c) Internal auditing under the ISPPIA is performed on behalf of the board and management. The internal auditor is an integral part of the entity whose primary role is to form an opinion about the state of control, report that opinion to the board and executive management, and offer advice and counsel to members of the entity.
d) Under the ISPPIA, the internal auditor can advise on, but not design, implement or operate, systems of control. The internal auditor may choose to make recommendations. It is the line manager's responsibility to take corrective action, or accept the related risk. The responsible line manager thus is free to accept, reject, or propose alternative courses of action in accordance with the wishes of the board and executive management.
e) The internal auditor is independent if s/he reports to a level of governance sufficient to permit: adequate consideration of audit reports; appropriate consideration of audit recommendations; and accomplishment of audit responsibilities free from interference. The internal auditor is objective when s/he does not subordinate professional judgment to the judgment of others on audit matters, when s/he has an honest belief in the audit work product, and when no