ACCA AA · Chapter 3 · Question 3 of 8
Which of the following arrangements would best support the independence of the internal audit function?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The head of internal audit reports functionally to the audit committee
Explanation
Reporting to the audit committee, made up of independent non-executives, protects internal audit from pressure from the managers whose areas it reviews. Reporting to or being budgeted by the finance director creates a conflict because internal audit regularly reviews the finance function. Rotating internal auditors into operational roles creates self-review threats.
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