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Internal audit independence.

To ensure their independence, internal auditors must carry out their work freely and objectively. They cannot subordinate their judgment on audit matters to that of others, and they should have the support of senior management, the board of directors and the audit committee. Use the following to determine internal audit independence.


* The director of internal auditing reports to an individual in the organization with sufficient authority to

* Promote independence.

* Ensure broad audit coverage.

* Ensure adequate consideration of audit reports.

* Ensure appropriate action on audit recommendations.

* The director communicates directly with the board, meets privately with the board annually and regularly attends and participates in board meetings.

* The board concurs in the appointment or removal of the director.

* The purpose, authority and responsibility of the internal auditing department is defined in a charter that is approved by senior management and the board of directors and assessed by the director of internal audit. Results of assessments are reported to senior management and the board. The charter should

* Establish the department's position within the organization.

* Authorize access to records, personnel and properties relevant to the performance of audits.

* Define the scope of internal auditing activities.

* The director should submit annually the following for senior management approval and to the board of directors for their information:

* Summary of the department's audit work schedule.

* Staffing plan.

* Budget.

* Activity reports that highlight significant findings and recommendations.


* Staff assignments ensure potential and actual conflicts of interest and bias are avoided.

* Internal auditors report to the director any Situations indicating a possible conflict of interest.

* Staff assignments are rotated periodically.

* Internal auditors do not assume operating responsibilities.

* Internal auditors do not audit activities they previously performed until a reasonable amount of time has elapsed, in which case the results are reviewed for objectivity before release.

* Internal auditors do not draft procedures for, design, install or operate systems.

Source: The Institute of Internal Auditors, Standards for the Professional Practice of Internal Auditing.
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Title Annotation:checklist on independence standards
Publication:Journal of Accountancy
Date:Jan 1, 1997
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