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)
Although recently the focus of internal auditing is on Sarbanes-Oxley compliance, the importance of maintaining the independence and objectivity of internal audit should never be underweighted. In fact, if the independence and objectivity of internal auditing is impaired, Sarbanes-Oxley compliance is impaired at the same time.
INDEPENDENCE: The freedom from conditions that threaten objectivity or the appearance of objectivity. Such threats to objectivity must be managed at the individual auditor, engagement, functional, and organizational levels (IIA).
Audit independence is essentially a state of mind'. Internal auditors can not be physically independent from the organization they are working for, but they can always stay objective.
OBJECTIVITY: An impartial, unbiased mental attitude and avoidance of conflicts of interest, allowing internal auditors to perform engagements in such a manner that they have an honest belief in their work product and that no significant quality compromises are made (IIA).
In order to stay objective, internal auditors should not assume any management responsibilities and should avoid auditing anything that they have direct or indirect authority or responsibility for. Internal auditors are not supposed to... [continues]
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