| The Journal of Accountancy article Proposed new guidance outlines 12 principles for internal auditing provides a further overview of the proposed changes. The actual proposal is available on the IIA’s website. The IIA is seeking comments by November 3, 2014. If approved, elements of the new framework could be available in the first quarter of 2015, followed by a new framework possibly in 2016. Show
The Core Principles for the Professional Practice of Internal Auditing, taken as a whole, describe internal audit effectiveness.
IMPLEMENTATION GUIDANCE DEMONSTRATING THE CORE PRINCIPLES FOR THE PROFESSIONAL PRACTICE OF INTERNAL AUDITING In this blog we’ll learn about the 7 key principles of effective management system auditing. Knowledge of these principles will help make sure you deliver an audit program that meets the needs of internal and external stakeholders and produces reliable, valid audit findings. Takeaways
Professional standards are often interesting documents. Typically they offer a set of core principles that are intended to act as a beacon of light to guide behaviors and decision-making among the noble practitioners and workers who toil under the given occupation’s collective flag. These professional standards or codes of conduct are generally well-intended, but in reality, they are almost always so over-worked by committees that they are written in a tortured language that is nearly unreadable and even harder to put into practice in daily working environments. On the other end of the spectrum, they may be too basic and “no duh” to offer any real insight. Either way, professional principles are mostly forgettable and offer very little to most professionals who must navigate difficult ethical dilemmas and workplace conundrums on a daily basis. Many statements of professional core principles are just a list of a few nice words that sound good, but are almost meaningless in practice. Consider the American Institute of Certified Public Accountants’ “Values and Vision Statement,” which lists the principles of integrity, passion, innovation, and collaboration. Along with each is a statement that doesn’t provide much help in terms of how to live by them. Along with Innovation, for example, we get: “We are encouraged to challenge ourselves to take chances and apply creative ideas and approaches to all that we do.” I’m sure all the CPAs out there are feeling invigorated after reading that. Multa Paucis My Latin is rusty and I don’t intend—nor would I ever be so bold—to offer an overarching phrase or motto that captures the essential mandate of internal audit in a few words. (Just for fun, though, if you have some ideas for one, please offer them in the comments section below! Extra points for Latin phrases.) But I do want to examine the core principles that are offered by internal audit professional associations. IIA’s Core Principles
Still, some of these are fairly vague, redundant, or beyond the professional’s control. It’s hard to imagine, for example, an internal auditor who sets out to not communicate effectively or chooses not to be “adequately resourced.” Still, they serve as a decent set of reminders for internal auditors to behave in way that is ethical and effective and they are worth revisiting on a regular basis. “How an internal auditor, as well as an internal audit activity, demonstrates achievement of the Core Principles may be quite different from organization to organization, but failure to achieve any of the principles would imply that an internal audit activity was not as effective as it could be in achieving internal audit’s mission,” the IIA states in its introduction to the principles. Interestingly, the last principle, “promotes organizational improvement,” is a watered down version of what was proposed in an earlier version of the principles, which was, “promotes positive change.” I’d argue that the earlier version was more powerful, as it evokes a bigger commitment to good than just incremental process improvement, as the resulting principle seems to suggest. It could even serve as that overarching principle that we mentioned earlier. Promote positive change, from the Latin, “ad promovere positivum mutatio.” Has a nice ring to it, right? I just hope Google Translate served me well. An Alternative Set of Principles I did recently come across a newly issued set of professional standards for internal auditors issued by the Institute of Chartered Accountants of India’s (ICAI) Internal Audit Standards Board. To be sure, the ICAI’s core principles borrow heavily from the IIA’s and some are identical. I do, however, think in some ways that it may be a more succinct, actionable, and a better-stated version, with clearly elaborated descriptions of what each principle means in practice. I’m not suggesting they are overall a better set of principles, just that they may offer some additional insights on the role of internal audit and the guidelines auditors should follow. In the interest of finally fulfilling the promise made in the headline of this article, I will run thought them now, with some of the language provided by the ICAI and some of my own thoughts. First a full list, and then I will address each one.
1. Independence Also, with the continuing trend for internal audit providing more advisory and consulting work, independence has grown in importance. As internal audit does more work to shape risk-management, compliance, and governance structures, they must use care not to abandon independence. Internal Audit can’t compromise its ability to provide an unvarnished take on the processes and functions it audits. As the ICAI so artfully puts it: “The internal auditor shall be free from any undue influences which force him [or her] to deviate from the truth. This independence shall be not only in mind, but also in appearance. Also, the internal auditor shall resist any undue pressure or interference in establishing the scope of the assignments or the manner in which these are conducted and reported, in case these deviate from set objectives.” 2. Integrity and Objectivity According the ICAI: “The internal auditor shall be honest, truthful, and be a person of high integrity. He [or she] shall operate in a highly professional manner and seen to be fair in all his dealings. He shall avoid all conflicts of interest and not seek to derive any undue personal benefit or advantage from his position.” What are the 7 audit principles?observe and comply with any applicable legal requirements; • demonstrate their competence while performing their work; • perform their work in an impartial manner, i.e. remain fair and unbiased in all their dealings; • be sensitive to any influences that may be exerted on their judgement while carrying out an audit.
What are the 5 C's of internal audit?What Are the 5 C's of Internal Audit? Internal audit reports often outline the criteria, condition, cause, consequence, and corrective action.
What are the main principles guiding the internal auditor while executing an internal audit?The Core Principles of Effective Internal Auditing. Demonstrates Integrity.. Demonstrates Competence and Due Professional Care.. Aligns With the Strategies, Objectives and Risks of the Organization.. Is Appropriately Positioned and Adequately Resourced.. Demonstrates Quality and Continuous Improvement.. Communicates Effectively.. What are the four principles that internal auditors need to uphold?Internal auditors are expected to apply and uphold the following principles:. Integrity. The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgment.. Objectivity. ... . Confidentiality. ... . Competency.. |
