"To be efficient and effective, the internal auditor must have adequate independence." Comment.

Internal auditing, being an independent, objective assurance and consulting activity designed to add value to and improve an organisation's operations, the concept of independence is equally relevant for the internal auditor. Under the provisions of Companies Act, 2013, internal auditor may or may not be an employee of the company, but he evaluates the functioning of the management at different levels. Therefore, to be efficient and effective, the internal auditor must have adequate independence. It may be noted that by its very nature, the internal audit function cannot be expected to have the same degree of independence as is essential when the external auditor expresses his opinion on the financial information. To ensure his independence he is made responsible directly to the board of directors through audit committee. Such a channel of communication provides an independent mode whereby an internal auditor can communicate and share his views on the scope of internal audit, findings, etc. If internal auditor is made subordinate to lower-level management, his independence will be affected which will affect his functioning and effectiveness. An outsider, like a Chartered Accountant or a Company Secretary or a firm of Chartered Accountants or a firm of Company Secretaries, if acting as internal auditor, is likely to be more independent than an employee of the organization.