Internal audit reporting lines are fixed and must report to the board.

Internal audit reporting lines are fixed and must report to the board.

• A. True
• B. False
• C. They only report to the CEO
• D. They only report to the CFO

Answer: (B)

The important idea here is independence. Internal audit must remain objective and free from day-to-day management influence. To support that, the Chief Audit Executive typically has a functional reporting line to the board or its audit committee so the board can oversee audits and findings directly. At the same time, administrative reporting—who handles budgeting and personnel—often sits with senior management (like the CEO or CFO). This combination helps balance practical operations with independence. So, stating that internal audit reporting lines are fixed and must report to the board is not correct. The structure is not rigidly fixed; the key is functional reporting to the board for oversight and independence, even if administrative reporting sits elsewhere.

The important idea here is independence. Internal audit must remain objective and free from day-to-day management influence. To support that, the Chief Audit Executive typically has a functional reporting line to the board or its audit committee so the board can oversee audits and findings directly. At the same time, administrative reporting—who handles budgeting and personnel—often sits with senior management (like the CEO or CFO). This combination helps balance practical operations with independence.

So, stating that internal audit reporting lines are fixed and must report to the board is not correct. The structure is not rigidly fixed; the key is functional reporting to the board for oversight and independence, even if administrative reporting sits elsewhere.