To some extent, the greater the "distance" between decisions made within the organisation from the board, the greater the need for independent audit.


The greater the volume of decisions made within the organisation by management without board consideration, the greater the need for independent audit.

The greater the volume of funds transacted by the organisation, the greater the need for independent audit.

The greater the opportunity for personal gain by employees (money, product, favours, etc), the greater the need for independent audit.

The greater the corporate risk incurred by management/organisation without adjudication by the board, the greater the need for independent audit.

The greater the role of management subjectivity in determining what's "good for the organisation" and/or shareholders without recourse to board deliberation, the greater the need for independent audit.

The greater the chance that an operational breach at grass-roots levels of the organiation causing an organisational breach of legislation or regulation, the greater the need for independent audit.

Much research has established categorically that people act subjectively, not through any malicious intent, but through the filter of personal benefit and risk aversion. Therefore, for directors to rely solely on internal reports without validation and substantiation is high risk behaviour.