You get “Iashlpr initialization failed” error after installing DHCP on Windows 2008R2

After installing DHCP server on windows 2008 R2, you notice that your system event log will be filled with Errors Event ID: 1070 “Iashlpr initialization failed: The DHCP service was unable to access path specified for the audit log. So DHCP server cannot talk to NPS server. It could be that IAS service is not started.”

Event ID: 1070
Source: DHCP-Server

Iashlpr initialization failed: The DHCP service was unable to access path specified for the audit log. So DHCP server cannot talk to NPS server

At first I have ignored this error since it wasn’t affecting my DHCP Server behavior, everything was working fine, and clients were obtaining proper IP addresses and network settings.
Until I had to configure WPAD entry in order to enable TMG Firewall Client to automatically detect the TMG server. TMG clients were failing to automatically detect the TMG Server, I start troubleshooting the issue, I tried everything add/remove the WPAD entry, changing the WPAD value, etc… but all my trials were unsuccessful.