To maintain organizational independence, the internal audit activity must be free from interference in determining the scope of their work. This independence is crucial for ensuring that the audit process is objective and unbiased, allowing auditors to assess areas they deem necessary without external pressures or limitations. This autonomy helps in providing an honest and accurate evaluation of the organization's controls, risk management, and governance processes.
The Institute of Internal Auditors (IIA) Standards, specifically Standard 1100 - Independence and Objectivity.
IIA's International Professional Practices Framework (IPPF).
"Internal Auditing: Assurance & Advisory Services" by IIA, Chapter on Independence and Objectivity.

The best control to detect cash register disbursement fraud in a large retail store is using cash registers with internal tapes that are tamper-proof and require a manager to process voids or refunds. This control directly addresses the risk of cash misappropriation at the point of sale by adding a layer of oversight and security to the transactions, particularly those that are prone to manipulation like voids and refunds. References: Best practices in retail fraud prevention, which often include the use of technology and managerial oversight to control and monitor cash transactions.

Before taking further action, the internal auditor should understand why management asked employees to act against policies and procedures. This could reveal underlying issues or misunderstandings that need to be addressed. References:
* IIA's International Standards for the Professional Practice of Internal Auditing.
* COSO Framework on Monitoring and Risk Assessment.

The internal audit charter provides a formal definition of the internal audit activity's purpose, authority, and responsibility. It is foundational for helping new auditors understand their role and how internal audit functions within the organization.

Protecting the objectivity of internal auditors is a crucial aspect of maintaining the integrity and reliability of the internal audit function. According to the International Standards for the Professional Practice of Internal Auditing (Standards), specifically Standard 1120: Individual Objectivity, internal auditors must have an impartial, unbiased attitude and avoid any conflict of interest. Prohibiting auditors from accepting gifts from audit clients or potential clients (Option C) is a clear measure to prevent conflicts of interest and ensure that auditors remain objective and free from undue influence. This practice is in line with maintaining the highest level of ethical standards as per the IIA's Code of Ethics.
IIA Standards, Standard 1120: Individual Objectivity
IIA Code of Ethics