Answer (C) is correct . According to Standard 1000.C1, the nature of consulting services should be defined in the charter. Internal auditors have traditionally performed many types of consulting services, including the analysis of controls built into developing systems, analysis of security products, serving on task forces to analyze operations and make recommendations, and so forth. The board (or audit committee) should empower the internal audit activity to perform additional services if they do not represent a conflict of interest or detract from its obligations to the committee. That empowerment should be reflected in the internal audit charter (PA 1000.C1-1).
Answer (A) is incorrect because Consulting services do not necessarily impair objectivity. Decisions to implement recommendations made as a result of a consulting service should be made by management. Thus, decision-making by management does not impair the internal auditors’ objectivity.
Answer (B) is incorrect because Assurance and consulting services are not mutually exclusive. One type of service may be generated from the other.
Answer (D) is incorrect because A primary internal auditing value is to provide assurance to senior management and audit committee directors. Consulting engagements cannot be performed in a manner that masks information that in the judgment of the chief audit executive (CAE) should be presented to senior executives and board members (PA 1000.C1- 1).
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