This action by the organization's board would potentially impair the internal audit activity's independence, because it would create a reporting threat that could undermine the CAE's ability to communicate the results of internal audit engagements objectively and directly to the board or the audit committee2. The CAE should have unrestricted access to the board or the audit committee, and should not be subject to any undue influence or interference from senior management in reporting the internal audit findings, opinions, and recommendations3.
References:
1: Standard 1110 - Organizational Independence - The Institute of Internal Auditors or The IIA 2:
Independence and Objectivity - The Institute of Internal Auditors or The IIA 3: Position paper: Independence and objectivity | Delivering internal audit | Resources | IIA An internal auditor is assigned to an assurance engagement.