Which of the following is an example of an impairment to an internal auditor's independence?
A.
An internal auditor delays reporting material financial statement audit findings until after his parents sell all of their stock in the company
B.
Following the restructuring of the organization, the internal audit activity now reports functionally to the chief financial officer
C.
A new member of the internal audit activity, who was the accounts payable supervisor for two years, is asked to consult on the implementation of a new accounts payable system
D.
Believing there must be errors in a given balance sheet account the internal auditor decides to expand his testing
The internal audit activity reporting functionally to the chief financial officer (CFO) can impair an internal auditor's independence. Functionally reporting to the CFO, who may be responsible for areas under audit, could create a conflict of interest and affect the auditor's ability to act independently. This arrangement can compromise the objectivity required for the internal audit function as outlined in the IIA standards.
IIA Standard 1110 - Organizational Independence
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