According to the IIA's International Standards for the Professional Practice of Internal Auditing (Standards)
2420.A1, it is stated that the internal auditor must disclose all material information obtained by the date of the final engagement communication, which could impact the engagement conclusion or decision-making process.
This ensures that all relevant facts are communicated to stakeholders appropriately.References: International Standards for the Professional Practice of Internal Auditing (Standards) 2420.A1

To promote organizational independence for the internal audit activity, the audit committee should approve the annual budget and resource plan for the internal audit activity. This action ensures that the internal audit has sufficient resources to independently carry out its mandate without undue influence from management.References: IIA guidance and standards concerning the role of the audit committee in supporting the independence and resources of the internal audit function.

The situation that would cause the greatest concern regarding impairment of internal audit objectivity is when the internal auditor uses his in-depth knowledge of systems development to assist the audit client in designing a new operational system with robust controls. By participating in the design and implementation of the system, the internal auditor becomes part of the process, which can compromise their ability to independently evaluate the system in future audits. This involvement creates a conflict of interest and impairs the auditor's objectivity.
References:
* The IIA Standards: Standard 1120 - Individual Objectivity: "Internal auditors must have an impartial, unbiased attitude and avoid any conflict of interest."
* IIA Practice Guide: "Independence and Objectivity": Discusses the risks associated with internal auditors performing operational roles that can impair their independence and objectivity.