3. The status of the internal audit activity
should be free from the effects of irresponsible policy changes by management.
The most effective way to assure that freedom is to
a. Have the internal audit charter approved by the board.
b. Adopt policies for the functioning of the internal audit
activity.
c. Establish an audit committee as a subcommittee of the board.
d. Develop written policies and procedures to serve as standards
of performance for the internal audit
activity.
a. Correct. The purpose, authority, and responsibility of the
IAA should be formally defined in the charter, which is approved by management
and the board.
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