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In which situation might an internal auditor lack objectivity?
Reviewing procedures for a new EDI connection
A former purchasing assistant's internal control review after transfer
Recommending performance measures for payroll processing
Assisting in verifying physical inventory by a payroll accounting employee
The correct answer is: A former purchasing assistant's internal control review after transfer
An internal auditor may lack objectivity in the situation involving a former purchasing assistant's internal control review after their transfer. Objectivity is crucial for auditors as it ensures that their evaluations and recommendations are impartial and based solely on evidence and facts. In this scenario, the internal auditor's prior relationship with the purchasing assistant creates a potential conflict of interest, as familiarity could bias their judgment. The auditor might unconsciously favor the former assistant's decisions or overlook issues due to their previous working relationship. Such biases can diminish the integrity of the audit process and the reliability of the findings. In contrast, the other scenarios, such as reviewing procedures for a new EDI connection or recommending performance measures for payroll processing, are not inherently linked to conflicts of interest or biases that arise from personal relationships. Assisting in verifying physical inventory by an employee, while possible for introducing some bias, is less likely to impact objectivity than a direct review of a former colleague's work. Each of these situations allows for more impartial evaluations where there is no direct personal or professional conflict affecting the auditor's judgment.