Which of the following is the most appropriate way to ensure that a newly formed internal audit activity remains free from undue influence by management?
A.
Appoint the chief audit executive as a member of the board.
B.
Adopt written policies and procedures for the internal audit activity, approved by the board.
C.
Ensure the chief audit executive reports administratively to the audit committee.
D.
Establish the internal audit activity’s position within the organization in an audit charter.
The most effective way to ensure that a newly formed internal audit activity remains free from undue management influence is to establish the internal audit activity’s position within the organization through an audit charter. According to the Institute of Internal Auditors (IIA) standards, the audit charter should define the purpose, authority, and responsibility of the internal audit activity, clearly outlining the scope of internal auditing within the organization. This foundational document formalizes the internal audit function's role and provides a framework that supports its operational independence.
The Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal Auditing.
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