Independence Requirement:The IIA's mandatory guidance emphasizes the importance of the CAE's independence to ensure unbiased internal audit activities.

Conflict of Interest:Seeking senior management’s recommendation for the CAE’s salary adjustment can create a conflict of interest and potentially compromise the CAE’s independence.

Best Practices:To maintain independence, the CAE’s compensation should be determined by the board without influence from senior management.

Standard Compliance:According to the IIA's Attribute Standard 1110 – Organizational Independence, the CAE must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities.

References:

IIA Standard 1110 – Organizational Independence ​​.