The independence and objectivity of the internal audit function are paramount, especially when the CAE has had prior involvement in the area under review.
Scenario Analysis:
Option A: Previous consulting assignments may raise concerns but do not inherently impair independence if managed correctly.
Option B: A historical role in accounting functions is less problematic if sufficient time has passed and there is no ongoing influence.
Option C: Having been the payroll manager presents a direct conflict of interest, compromising the CAE's objectivity.
Option D: Reviews following consulting assignments are common practice and do not necessarily indicate a conflict.
Conclusion:
It is problematic for the CAE to provide assurance over payroll functions if they were previously the payroll manager, as this creates a clear conflict of interest and threatens audit objectivity.
IIA’s International Standards for the Professional Practice of Internal Auditing, Standard 1130: Impairment to Independence or Objectivity.
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