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ma’am the following point is mentioned in my kaplan text relating to assessing the objectivity of internal auditors, when external auditors are planning to rely on their assessment of internal control system(pardon me for writing such a convoluted sentence!):
“Whether those charged with governance are responsible for employment decisions such as remuneration.”
i just don’t get how this will be helpful in assessing the objectivity of internal audit department?
That point comes straight from ISA 610. It’s because the head of internal audit (for example) is likely to be more effective in ensuring that the function fufils a monitoring role (for example) if his remuneration doesn’t depend on the managing director/CEO or other executive.
Of course the fact that internal auditors are employed by the company is always going to have some bearing on their objectivity (the same as when the auditor seeks to rely on a management expert) – but that’s not the only factor considered in the auditor’s evaluation of objectivity.
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