Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 216

During a review of employee benefits, a staff internal auditor observed an ambiguity in the incentive compensation policy. If reported, it could negatively impact the internal auditor's compensation. Which of the following would encourage the internal auditor to be objective in his work?

Answer options

• A. Periodic reinforcement of the internal audit activity's code of ethics disclosure practices.
• B. External assessments of the internal audit activity every five years.
• C. Audit committee review of every engagement report at the conclusion of the audit.
• D. Internal audit charter approved by the board.

Correct answer: C

Explanation

Option C is correct because having the audit committee review every engagement report ensures an objective oversight, reducing the risk of bias in the internal auditor's work. The other options, while they promote ethical practices or periodic assessments, do not provide the same level of direct oversight that can help mitigate potential personal conflicts of interest.