The Standard of Objectivity for Internal Auditors: Memory and Bias Effects

Abstract

Internal auditors perform many functions regarding internal control systems, and these may include assisting in the actual design of internal control systems. This could lead to situations in which the internal auditor subsequently audits an internal control system that s/he helped to design. The objective of this study was to investigate whether, and how, this dual role can affect the of the internal auditor's judgment. The Standards for the Professional Practice of Internal Auditing describe the standards of independence and as follows: Independence permits internal auditors to render the impartial and unbiased judgments essential to the proper conduct of audits. It is achieved through organizational status and (Institute of Internal Auditors [1978, sec. 100.01]). At the same time, the standard acknowledges that objectivity is presumed to be impaired when internal auditors audit any activity for which they had authority or responsibility. This impairment should be considered when reporting results [1978, sec. 120.02]. Although it may be desirable to avoid situations in which internal auditors review their own previous nonaudit work, the fact that internal audit staffs are often small and highly specialized makes this an imprac-