Ch.B, Topic 1: Abide By and Promote Compliance with the IIA's Code of Ethics

Question 1

A formal code of ethics provides internal auditors with:

Answer 1

generally accepted standards of conduct useful to an organization and its customers. Sets forth uniform approach to guide conduct.

Question 2

1. The IIA “Code of Ethics” describes the….

2. The IIA “Code of Ethics” does more than demand ethical conduct; it…

Answer 2

1. Minimum requirements for conduct, and behavioral expectations rather than specific activities.
2. defines that conduct in detail.

Question 3

IIA’s Code of Ethics (standards glossary)

Answer 3

“principles relevant to the profession and practice of internal auditing, and Rules of Conduct that describe behavior expected of internal auditors. The Code of Ethics applies to both parties and entities that provide internal audit services.”

Question 4

The Code of Ethic’s four fundamental principles of professional conduct are:

Answer 4

1. Confidentiality
2. Objectivity
3. Competency
4. Integrity

Question 5

Who must abide by the IIA’s Code of Ethics?

Answer 5

All CIAs (regardless of whether they are currently practicing)

Question 6

Principle of Integrity:

Answer 6

The integrity of internal auditors establishes trust and thus provides the bases for reliance on their judgment.

Question 7

Principle of Objectivity:

Answer 7

Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors make a balanced assessment of all the relevant circumstances and are not unduly influenced by their own interests or by others in forming judgments.

Question 8

Principle of Competency:

Answer 8

Internal auditors apply the knowledge, skills, and experience needed in the performance of internal audit services.

Question 9

Rules of Conduct: Integrity

Internal auditors….

1. 1 shall perform
2. 2. shall observe
3. 3. shall not
4. 4 shall respect

Answer 9

1. 1 shall perform their work with honesty, diligence, and responsibility
2. 2. shall observe the law and make disclosures expected by the law and the profession.
3. 3. shall not knowingly be a party to any illegal activity, or engage in acts that are discreditable to the profession of internal auditing or to the organization.
4. 4. Shall respect and contribute to the legitimate and ethical objectives of the organization.

Question 10

Rules of Conduct: Objectivity
internal auditors…

2. 1. shall not participate
3. 2. shall not accept
4. 3. shall disclose

Answer 10

2. 1 Shall not participate in any activity or relationship that may impair or be presumed to impair their unbiased assessment. This participation includes those activities or relationships that may be in conflict with the interests of the organization.
3. 2 Shall not accept anything that may impair or be presumed to impair their professional judgment.
4. 3. Shall disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review.

Question 11

Rules of Conduct: Confidentiality
Internal auditors…

3. 1. Shall be prudent
4. 2 Shall not use information

Answer 11

3. 1. Shall be prudent in the use and protection of information acquired in the course of their duties.
4. 2. Shall not use information for any personal gain or in any manner that would be contrary to the law or detrimental to the legitimate and ethical objectives of the organization.

Question 12

Rules of Conduct: Competency
Internal auditors…

4. 1. Shall engage only
5. 2. Shall perform internal audit services
6. 3. Shall continually improve

Answer 12

4. 1. Shall engage only in those services for which they have the necessary knowledge, skills, and experience.
5. 2. Shall perform internal audit services in accordance with the international standards for the professional practice of internal auditing.
6. 3. Shall continually improve their proficiency and the effectiveness and quality of their services.

Question 13

Standard 1130.A1 - Impairment to Independence and Objectivity: Objectivity is presumed to be impaired if an internal auditor provides…

Answer 13

Assurance services for an activity for which the internal auditor had responsibility within the previous year (last 12 months) or if she plans to work in that area in the near future.

Question 14

Practical Application of COE Integrity Principle:

~ The internal auditor should have knowledge of..
~ Integrity includes

Answer 14

~of the requirements for the Code of Ethics and perform all activities according to the Code.

~ honesty, diligence, and responsibility, observance of laws, not performing illegal activity, and contributing to the legitimate and ethical objectives of the organization.

Question 15

Practical Application of COE Objectivity Principle:

~ The internal auditor should not perform audits

Answer 15

~ where the assessment would be biased or professional judgment may be impaired. All facts must be disclosed. If auditor does not feel comfortable to complete an audit, he or she SHOULD ask to be removed from the team.

Question 16

Practical Application of COE Confidentiality Principle:

~ Information obtained while performing an audit must be…

Answer 16

protected and used only as appropriate in the engagement. Information should be used only in conformance to laws or regulations and never used for personal gain.

Question 17

Practical Application of COE Competency Principle:

~ The necessary knowledge, skills, and experiences are important requirements for….

Answer 17

providing internal auditing services. Each internal auditor should have a plan to receive knowledge or training to enhance future performance.