Explanation:

Let’s break down each option.

- President Finance:

If the internal auditor reports to the finance head, conflict of interest is likely. Finance can be one of the main areas being audited. Independence here gets blurry.

- President System:

Reporting to the systems or IT head isn’t ideal. The auditor should be able to review the systems area without being answerable to the person running it.

- Managing Director:

This is usually below the CEO in the hierarchy. Still, it gives better independence than reporting to functional heads but may not give full authority, depending on the org chart.

- CEO:

The CEO is at the top, detached from most individual functions. Reporting here means maximum independence because the auditor isn’t beholden to anyone whose work they’re inspecting.

Correct Answer: Option 4 – CEO