The internal auditing department of a large service entity is responsible to the controller who, in turn, is responsible to the president. As part of the internal audit responsibility, regular audits are performed of payroll, general accounting, accounts receivable, and accounts payable. Because these activities also report to the controller, criticism is frequently made that the internal auditor cannot be objective.

Required: 

Following are two solutions that might eliminate the criticism. Describe briefly the advantages and disadvantages of each.

1. The internal auditing department could send audit reports about activities under the controller's supervision directly to the president.

2. The director of internal auditing could discuss the organizational problem with the independent auditors and ask them to make a recommendation that would eliminate the criticism.