CIA-1 - Ethics and Professionalism - Section B.3

Analyze policies that promote objectivity and options to mitigate impairments, including reassigning auditors, outsourcing an engagement, disclosing impairments, and declining inappropriate gifts.

Analyse the safeguards a function uses to protect objectivity and choose the appropriate response to a given impairment: reassign the affected auditor, outsource the performance or supervision of the engagement, or formally disclose the impairment to the relevant parties. Recognise when accepting a gift, reward, or favour would compromise objectivity and must be declined.

Objectivity safeguardsDisclosure of impairmentGifts and favoursReassignment

Practice question for this objective

Free sampleEthics and Professionalismhard

During an assurance engagement, the manager whose area is under review offers the internal auditor a lavish weekend break as a token of appreciation, and the auditor politely refuses to accept it. In terms of the policies that promote objectivity, which safeguard does refusing the offer represent?

ADisclosure of an impairment to the parties who rely on the engagement.
BReassignment of the engagement to a different internal auditor.
CDeclining the inappropriate gift to prevent an objectivity impairment. Correct
DOutsourcing the engagement to an external assurance provider.

Recognise that refusing gifts or favours that could bias judgement is the objectivity safeguard of declining inappropriate gifts. Accepting a significant gift creates a sense of obligation that could reasonably be seen to sway the auditor's conclusions, so declining it removes the threat at source and preserves the appearance and reality of objectivity.

Why A is wrong: Disclosure applies once an impairment already exists and cannot be removed; declining the gift prevents the impairment arising, so no disclosure is triggered here.

Why B is wrong: Reassignment addresses a prior-involvement or relationship conflict; a one-off offer of a gift is dealt with by turning it down, not by changing who does the work.

Why C is correct: Correct: refusing gifts or favours that could reasonably be seen to influence judgement is the declining safeguard, keeping the auditor free of any obligation to the auditee.

Why D is wrong: Outsourcing is reserved for impairments the function cannot cure itself; a gift offer is handled directly by refusal, making outsourcing a disproportionate and mismatched response.

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