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Attribute Standard 1100: Independence and Objectivity
The internal audit activity must be independent, and internal auditors must be objective in performing their work
Interpretation of Standard 1100 (Independence)
Independence is freedom from conditions that threaten the ability of the internal audit activity to carry out responsibilities in an unbiased manner
How does on achieve the degree of independence necessary to carry out the activity?
CAE has direct and unrestricted access to senior management and the board, achieved through a dual-reporting relationship.
Attribute Standard 1110 - Organizational Independence
CAE must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities. The CAE must confirm to the board, at least annually, the organizational independence of the internal audit activity
Interpretation of Standard 1110 (Organization Independence)
Organization independence is achieved when the CAE reports functionally to the board.
Examples of functional reporting
The board:
- Approves the internal audit charter
- Approves the risk based internal audit plan
- Approving the budget and resource plan
- Approving decision regarding the appt and removal of the CAE
Dual-Reporting Relationship
Reporting functionally to the board and administratively to the the CEO
Administrative Reporting
Reporting relationship that facilitates day to day operations:
- Budget and mgmt accounting
- HR administration
- Internal communications and info flows
- Administration of the activity's policies and procedures
Implementation Standard 1110.A1 - how internal audit independence is applied as a practical matter
The internal audit activity must be free from interference in determining the scope of internal auditing, performing work, and communicating results.
Attribute Standard 1111 - Direct Interaction with the Board
The CAE must communicate and interact directly with the board
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