Independent or Dependent? The Modern Internal Audit Dilemma

Internal Audit is expected to be independent. That expectation is embedded in professional standards, audit charters, and audit committee oversight. Objectivity is not a “nice to have”, it’s foundational to the function’s credibility.

Yet in practice, independence is often tested well before an audit begins, during planning.

Many Internal Audit functions are described as independent but are quietly expected to align their work with leadership priorities, strategic initiatives, and management-defined risks. Over time, this creates a function that appears objective while operating within boundaries shaped by the very people it is meant to challenge.

When “Risk-Based” Isn’t Really Risk-Based

The profession expects Internal Audit plans to be risk-based and informed by an understanding of the organization’s objectives and risks. That expectation is reasonable. The issue arises when “risk-based” becomes synonymous with “management-identified risk.”

Leadership input is critical, but it is also inherently biased. Executives are incentivized to focus on strategic priorities, protect recent investments, and emphasize risks that feel manageable or visible. None of this is malicious; it’s human.

When Internal Audit relies too heavily on leadership risk assessments, the audit plan starts to reflect priorities rather than exposure. Certain areas are repeatedly audited, while others are consistently deferred, not because risk is low, but because scrutiny is uncomfortable.

That’s alignment. Not independence.

The Pressure That Rarely Gets Named

Professional standards emphasize objectivity and freedom from interference in determining scope, performing work, and communicating results. In reality, interference is rarely explicit.

It shows up as timing concerns, scope suggestions, and well-intentioned requests to “focus on value-add.” These conversations don’t violate standards on their own. But over time, they influence what Internal Audit chooses to examine, and what it quietly avoids.

Independence is rarely lost through confrontation. It erodes through accommodation.

A Necessary Counterpoint: Management Realities Are Real

Acknowledging these dynamics doesn’t mean Internal Audit should ignore organizational realities.

Leadership teams operate under intense pressure such as quarterly targets, regulatory scrutiny, transformation deadlines, and limited resources. Not every risk can be audited every year. Not every sensitive area can be addressed immediately.

Internal Audit that ignores these constraints risks becoming disconnected and ineffective.

The challenge isn’t whether to consider strategy and leadership priorities. It’s how to do so without surrendering professional judgment.

Independence Doesn’t Mean Ignoring Strategy

Professional standards expect Internal Audit to understand the organization’s objectives and strategies. Independence does not require detachment from the business, it requires the ability to challenge it.

Strategic initiatives often introduce the greatest risk: rapid growth, digital transformation, third-party reliance, cost reduction. Treating strategy as a reason to defer scrutiny misses the point. Strategy should be a trigger for assurance, not a shield from it.

Reframing the Risk Assessment

Internal Audit preserves independence by owning the risk assessment process, not by excluding leadership input, but by balancing it.

Effective risk assessments reflect multiple perspectives:

• Leadership’s view of objectives and priorities

• Internal Audit’s understanding of control maturity and past issues

• Data from incidents, near misses, and emerging trends

• External and regulatory risk signals

When Internal Audit determines how these inputs are weighted and retains final judgment over the plan, independence holds, even when the conclusions are uncomfortable.

What CAEs Can Do Differently This Year

Chief Audit Executives don’t need a structural overhaul to protect independence. Small, deliberate shifts make a difference:

• Be explicit about trade-offs. Clearly explain what risks are not covered and why and what that means.

• Separate advisory from assurance. Support strategic initiatives, but be transparent about when independent assurance will follow.

• Use the audit committee intentionally. Discuss disagreements, deferred risks, and emerging issues, not just plan completion.

• Refresh risk assessments mid-year. Independence isn’t annual; it’s continuous.

• Document judgment. When management input influences the plan, record how and why professional judgment was applied.

These actions don’t create conflict. They create clarity.

Final Thought

Internal Audit’s independence is rarely lost in one decision. It fades gradually through planning compromises, scope adjustments, and unchallenged assumptions.

The profession’s standards provide the authority to remain objective, but independence has to be exercised.

Supporting organizational objectives is part of the role. Becoming dependent on management’s version of risk is not.

Because an Internal Audit function that only audits where leadership is comfortable isn’t independent... it’s just well-behaved.