An employee transfers from an organization's risk management department to become the lead IS auditor. While in the risk management department, the employee helped develop the key performance indicators (KPIs) now used by the organization. Which of the following would pose the GREATEST threat to the independence of this auditor?
The greatest threat to the independence of an auditor in this scenario would be developing KPIs to measure the internal audit team. This creates a conflict of interest as the auditor could end up evaluating their own performance or the performance of their department, thereby compromising objectivity and independence. An auditor must maintain a level of detachment and impartiality, which would be significantly undermined if they are involved in creating the metrics by which their own audit functions are judged.
the greatest threat to the independence of this auditor is developing KPIs to measure the internal audit team. This task creates a potential conflict of interest as the auditor may be evaluating their own work and performance.
B. Recommending controls to address the IT risks identified by KPIs
The auditor should not be involved in the design of controls. Proposing controls to address IT risks identified by KPIs would lead the auditor to control through KPIs of his own design, which would undermine auditor independence.
C: Developing KPIs to measure internal audit team.
C. Developing KPIs to measure the internal audit team
The correct answer to this question is C. Developing KPIs to measure the internal audit team. Independence is one of the most important qualities of an auditor, and it is essential to ensure that the auditor can carry out his or her responsibilities without any bias or undue influence. When an employee moves from one department to another, there is a potential risk that their previous role may influence their current role and create a conflict of interest. In this case, the employee helped develop the KPIs that are now being used by the organization, and these KPIs are being used to measure the effectiveness of the internal audit team. This means that the auditor may be evaluating their own work and performance, which could create a potential conflict of interest.
The auditor should not be involved in the design of controls.
C. - the question is about the greatest threat to its independence. The former - merely supporting - function in the development of the general KPIs of the organization is certainly the weaker threat to his independence than a current development of KPIs for the assessment of the internal audit team with his current, current activity as Lead Auditor, obviously within the same organization, i.e. his own team. In B.'s case, I see no compelling connection between his former support for the general organizational KPIs and the risk-related KPIs that are now recommended. If so, this should be specified more precisely in the question. This option is also weaker in the ranking compared to C.