How Does Internal Auditing Maintain Its Independence and Objectivity

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Table of Contents

I. Introduction
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
VI. Conclusion
VII. Bibliography

I. Introduction
‘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
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They also provide consulting, recommendations, appraisals, and analysis to top management executives that is independent from the line of management.

III. Profession guidance on independence and objectivity
1) Practice Advisory 1100 ---- Independence and Objectivity
Internal auditors are independent when they can carry out their work freely and objectively. Independence permits internal auditors to render the impartial and unbiased judgments essential to the proper conduct of engagements. It is achieved through organizational status and objectivity.
2) Practice Advisory 1110 ---- Organizational Independence
The IIA's Standards for the Professional Practice of Internal Auditing
(Standards) require that the chief audit executive (CAE) report to a level within the organization that allows the internal audit activity to fulfill its responsibilities. The Institute believes strongly that to achieve necessary independence, the CAE should report functionally to the audit committee or its equivalent. For administrative purposes, in most circumstances, the CAE should report directly to the chief executive officer of the organization.
3) International Standards for the Professional Practice of Internal Auditing (ISPPIA) ---
a) The board and executive management require reasonable assurance the entity's mission and objectives can be achieved. To that end, they are responsible for monitoring the actions subordinate line

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