An internal audit department, that organizationally reports
exclusively to the chief financial officer (CFO) rather than
to an audit committee, is MOST likely to:
A. have its audit independence questioned.
B. report more business-oriented and relevant findings.
C. enhance the implementation of the auditor's recommendations.
D. result in more effective action being taken on the
recommendations.
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Answer Posted / guest
Answer: A
According to a recent ISACA benchmarking survey most
internal audit departments report directly to an audit
committee. However, many organizations also choose to have
the internal audit department either jointly or solely
report to the chief financial officer (CFO). In this same
survey, the IS audit function almost exclusively reports
directly to the director of internal audit. The IS auditor
who reports to the head of an operational department would
have the appearance of a compromised independence.
Generally, an IS auditor should report one level above the
reporting level of the auditee. Reporting to the CFO may not
have an impact on the content of audit findings, which
should normally be business-oriented and relevant as an
auditor is expected to understand the business being
audited. Taking effective action on an audit's
recommendations should be the responsibility of senior
management and will not be enhanced by the fact that the
audit department reports to the CFO. Follow-up of the
implementation of audit recommendations is conducted by the
auditor and/or by the administration department and would
not be enhanced by reporting to the CFO.
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