In which scenario might it be considered problematic for the chief audit executive (CAE) to provide assurance services over the payroll function?

In which scenario might it be considered problematic for the chief audit executive (CAE) to provide assurance services over the payroll function?
A . The CAE previously undertook a consulting assignment in that area to improve processes,
B . A couple of years ago, the CAE performed accounting functions for the payroll department.
C . Prior to becoming the CAE, the CAE was the payroll manager.
D . The assurance review was initiated following issues identified during a consulting assignment requested by management.

View Answer

Answer: C

Explanation:

It would be considered problematic for the chief audit executive (CAE) to provide assurance services over the payroll function if, prior to becoming the CAE, the CAE was the payroll manager. This scenario poses a conflict of interest and impacts the objectivity required for assurance services, as the CAE might have inherent biases or a conflict due to previous roles and responsibilities within the payroll function.

Reference: The Institute of Internal Auditors (IIA) – Code of Ethics and International Standards for the Professional Practice of Internal Auditing.