Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 56

Which of the following reporting relationships results in the greatest impairment to the independence of the chief audit executive (CAE)?

Answer options

• A. The CAE reports administratively and functionally to the president.
• B. The CAE reports administratively to the president and functionally to the board.
• C. The CAE reports administratively to the chief financial officer and functionally to the president.
• D. The CAE reports administratively to the audit committee and functionally to the chief operating officer.

Correct answer: A

Explanation

Option A is correct because having the CAE report both administratively and functionally to the president creates a significant conflict of interest, limiting their independence. Options B, C, and D offer varying degrees of separation from executive management or the board, which helps maintain the CAE's objectivity and independence.