Question

Assume that an internal auditor is auditing a division in which the divisions chief financial officer is a close personal friend. The auditor learn that the friend is to be replaced after a series of critical contract negotiations with the U.S. Department of Defense. The auditor relays this information to the friend. Which principle of the IIAs Code of Ethics has been violated?

Select one:
a. Integrity.
b. Objectivity.
c. Confidentiality.
d. Privacy.

Answer 1

The internal auditor violated the principle of confidentiality by sharing sensitive information with a close personal friend who is the division's CFO. The correct option is C) confidentiality.

Step-by-step explanation:

When an internal auditor, who is auditing a division, reveals confidential information to the division's chief financial officer who is a close personal friend, the auditor violates the principle of confidentiality.

According to the Institute of Internal Auditors (IIA) Code of Ethics, confidentiality must be maintained, and no internal audit information should be disclosed without proper authority or unless there is a legal or professional obligation to do so.

Furthermore, the sharing of sensitive information, like impending changes in divisional leadership, could potentially affect the outcomes of critical contract negotiations and thus represents a breach of ethical conduct.