Upon joining the internal audit activity, each new auditor receives a copy of the audit handbook. Which of the following handbook policies has the greatest risk of compromising audit objectivity?
A.
Internal auditors should obtain 80 hours of continuing professional education every two years, 20 of which should be audit-related, and the remainder may be operations-related.
B.
Internal auditors should rotate to other areas of the organization for nonaudit assignments to gain an understanding of the organization's operations.
C.
Internal auditors should have direct and unrestricted access to personnel and information throughout the organization and the governing board.
D.
Internal auditors should undergo annual performance appraisals conducted by the chief audit executive, who reports administratively to the chief financial officer.
Having internal auditors rotate to other areas of the organization for non-audit assignments poses the greatest risk of compromising audit objectivity. This practice can lead to conflicts of interest and familiarity threats, as auditors may become too closely aligned with the operations of the areas they audit later, potentially impairing their impartiality and independent judgment.
IIA Standards on objectivity and independence; guidelines on auditor rotation and non-audit assignments.
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