In assurance engagements, it is standard practice for internal auditors to prepare and issue a written report upon completion. This report includes the results of the engagement and is issued to the client or the party that requested the engagement. This practice ensures transparency, accountability, and provides the client with necessary information to make informed decisions.
The Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal Auditing

When an internal auditor suspects fraudulent activity, such as erroneous payments to a fraudulent bank account, the appropriate course of action is to escalate the concern to the engagement supervisor (Option D).
This step ensures that the issue is handled with the necessary urgency and oversight. According to the IIA Standards, particularly Standard 2060: Reporting to Senior Management and the Board, the CAE must communicate significant risk exposures and control issues, including fraud risks, to senior management and the board. Escalating the concern ensures the appropriate levels of the organization are aware and can take timely action.
IIA Standards, Standard 2060: Reporting to Senior Management and the Board IIA Practice Guide: Internal Auditing and Fraud

The collaborating style of conflict resolution is most effective in situations where there is a high level of trust among the parties. This style involves both assertiveness and cooperation, aiming to explore disagreements comprehensively to find solutions that genuinely satisfy the concerns of all parties involved. It requires a trustful environment where parties are open and willing to share their perspectives and work together constructively.
Institute of Internal Auditors (IIA) - Professional Practices Framework on Conflict Resolution

In the context of an assurance engagement, the auditor determines the scope of the engagement during the planning phase, which includes identifying the specific areas to be reviewed. In this case, if the engagement included a review of the security and privacy of payroll records, it means that during the planning phase, the auditor identified this area as part of the engagement scope. This step is crucial to ensure that the engagement objectives are met and that all relevant risks and controls are evaluated.
The IIA Standards: Standard 2200 - Engagement Planning: "Internal auditors must develop and document a plan for each engagement, including the engagement's objectives, scope, timing, and resource allocations." The IIA Practice Guide: "Engagement Planning: Establishing Objectives and Scope": Emphasizes the importance of defining the scope during the planning phase.

In responding to a request from senior management for the internal audit activity to review and amend policies when auditing the purchasing department, the chief audit executive would most likely give primary consideration to maintaining internal audit independence. This request potentially places the internal audit activity into a management role, which could impair its independence and the ability to perform unbiased audits in the future. According to IIA standards, internal auditors should avoid taking on operational responsibilities to preserve their independence.
IIA Standards on independence and objectivity.