The internal auditor is the entity’s staff that work independently and objectively. This role normally reports directly to the audit committee and board of directors of an entity.

However, there are certain things that internal audit should report to senior management of the entity like CEO and CFO. For example, the internal audit might report about staff KIP as well as a performance evaluation for staff annual increment.

There are many reasons why internal auditors should not have a direct report to CFO and CEO of the entity. Here is the reason:

  • To maintain the independence of works: The internal audit main objective is to added value to the entity and helps them to meet their objective. This is required independence to assess whether current risk management that possesses by senior management is well identifying and manage. They control and well as strategy are normally held by CFO, CEO, as well as other senior management. To have a good assessment, internal audit should not report directly to these people.
  • To maintain objectivity:
  • To avoid conflict of interest:
  • To ensure the high discipline approach are maintain:
  • Required by law:
  • Required by shareholders and board of directors:
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