Which of the following would encourage the internal auditor to be objective in his work?

During a review of employee benefits, a staff internal auditor observed an ambiguity in the incentive compensation policy. If reported, it could negatively impact the internal auditor’s compensation.

Which of the following would encourage the internal auditor to be objective in his work?
A . Periodic reinforcement of the internal audit activity’s code of ethics disclosure practices.
B . External assessments of the internal audit activity every five years.
C . Audit committee review of every engagement report at the conclusion of the audit.
D . Internal audit charter approved by the board.

View Answer

Answer: A

Explanation:

Periodic reinforcement of the internal audit activity’s code of ethics disclosure practices would encourage the internal auditor to maintain objectivity, even when personal compensation might be affected. The IIA’s Code of Ethics emphasizes integrity and objectivity, and regular reinforcement helps auditors adhere to these principles, ensuring that they act impartially and do not allow conflict of interest or undue influence to impair their judgment.

Reference: The Institute of Internal Auditors (IIA) – Code of Ethics.