Perhaps the issue of independence in internal audit departments goes back to, as you mentioned before, the morality of the internal audit staff. The internal audit department I worked for took the issue of independence seriously. It was important to not only keep an independent mindset, but also to be independent in appearance. The internal audit department was kept in a separate building if possible, and when it moved it was one of the few departments in the building that had highly restricted access. The reporting structure also plays an important part in the appearance of independence.

How important is it that an external auditor appears independent?

What are some ways that an external auditor may appear to not be independent?

Response must be substantive. Thanks for the help!