Code of Ethics Flashcards
It is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
Internal Auditing
Purpose of the Institute’s Code of Ethics
Promote ethical culture in the profession of internal auditing
Two essential components of Code of Ethics
- Principles that are relevant to the profession and practice of internal auditing
- Rules of conduct that describe behavior norms expected of internal auditors
This is an aid to interpreting the Principles into practical applications and are intended to guide the ethical conduct of internal auditors
Rules of Conduct
The principles that internal auditors should uphold
- Integrity
- Objectivity
- Confidentiality
- Competency
Internal auditors:
1. Shall perform their work with honesty, diligence, and responsibility.
2. Shall observe the law and make disclosure expected by the law and the profession.
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. Shall respect and contribute to the legitimate and ethical objectives of the organization
Integrity
Internal Auditors:
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.
2. Shall not accept anything that may impair or be presumed to impair their professional judgment.
3. Shall disclose all material facts known to them that, if not disclose, may distort the reporting of activities under review.
Objectivity
Internal auditors:
1. Shall be prudent in the use and protection of information acquired in the course of their duties.
2. Shall not use information for any personal gain or in any manner that would be contrary to the lw or detrimetnal to the legitimate and ethical objectives of the organization.
Confidentiality
Internal auditors:
1. Shall engage only in those services for which they have the necessary knowledge, skills, and experience.
2. Shall perform internal audit services in accordance with the International Standards for the Professional Practice of Internal Auditing.
3. Shall continually improve their proficiency and the effectiveness and quality of their services.
Competency
It is conducted in diverse legal and cultural environments; within organizations that vary in purpose, size, complexity, and structure; and by persons within or outside the organization.
Internal Auditing
Purpose of the International Standards for the Professional Practices of Internal Auditing (Standards)
- Guide adherence with the mandatory elements of the International Professional Practices Framework
- Provide a framework for performing and promoting a broad range of value-added internal auditing services.
- Establish the basis for the evaluation of internal audit performance.
- Foster improved organizational processes and operations.
It involves the internal auditor’s objective assessment of evidence to provide an independent opinion or conclusions regarding an entity, operation, function, process, system, or other subject matter. The nature and scope are determined by the internal auditor.
Assurance services
These are advisory in nature and are generally performed at the specific request of an engagement client. The nature and scope are subject to agreement with the engagement client.
Consulting services
1000
Purpose, Authority, and Responsibility
It is a formal document that defines the internal audit activity’s purpose, authority, and responsibility. It establishes the internal audit activity’s position within the organization.
Internal Audit Charter
Recognizing the Mandatory Guidance in the Internal Audit Charter
1010
He should discuss the Mission of Internal Audit and the mandatory elements of the International Professional Practices Framework with senior management and the board.
Chief Audit Executive
Independence and Objectivity
1100
The internal audit activity must be independent, and internal auditors must be objective in performing their work.
- Independence and objectivity
It is the freedom from conditions that threaten the ability of the internal audit activity to carry out internal audit responsibilities in an unbiased manner.
Independence
It is an unbiased mental attitude that allows internal auditors to perform engagements in such a manner that they believe in their work product and that no quality compromises are made.
objectivity
Organizational Independence
1110
The chief audit executive must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities. The chief audit executive must confirm to the board, at least annually, the organizational independence of the internal audit activity.
- Organizational Independence
It is effectively achieved when the chief audit executive reports functionally to the board.
- Organizational Independence
The internal audit activity must be free from interference in determining the scope of internal auditing, performing work, and communicating results. The chief audit executive must disclose such interference to the board and discuss the implications.
- A1
Direct Interaction with the Board
1111
The chief audit executive must communicate and interact directly with the board.
- Direct Interaction with the Board
Chief audit Executive roles Beyond Internal Auditing
1112
Where the chief audit executive has or is expected to have roles and/or responsibilities that fall outside of internal auditing, safeguards must be in place to limit impairments to independence or objectivity.
- Chief Audit Executive Roles Beyond Internal Auditing
Individual Objectivity
1120
Internal auditors must have an impartial, unbiased attitude and avoid any conflict of interest.
- Individual Objectivity
Impairment to Independence or Objectivity
1130
If independence or objectivity is impaired in fact or in appearance, the details of the impairment must be disclosed to appropriate parties. The nature of the disclosure will depend upon the impairment.
- Impairment to Independence or Objectivity
Proficiency and Due Professional Care
1200
Engagements must be performed with proficiency and due professional care.
- Proficiency and Due Professional Care
Proficiency
1210
Due Professional Care
1220
Internal auditors must apply the care and skill expected of a reasonable prudent and competent internal auditor. though it does not imply infallibility.
- Due Professional Care
Continuing Professional Development
1230
Internal Auditors must enhance their knowledge, skills, and other competencies through continuing professional development.
- Continuing Professional Development.
Quality Assurance and Improvement Program
1300
The Chief Audit Executive must develop and maintain a quality assurance and improvement program that covers all aspects of the internal audit activity.
- Quality Assurance and Improvement Program
Requirements of the Quality Assurance and Improvement Program
1310
The quality assurance and improvement program must include both internal and external assessments.
- Requirements of the Quality Assurance and Improvement Program
Internal Assessments
1311
It is an integral part of the day-to-day supervision, review, and measurement of the internal audit activity. It is incorporated into the routine policies and practices used to manage the internal audit activity and use processes, tools, and information considered necessary to evaluate conformance with the Code of Ethics and the Standards.
Ongoing Monitoring
External Assessments
1312
It must be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the organization.
External assessments
Reporting on the Quality Assurance and Improvement Program
1320
The chief audit executive must communicate the results of the quality assurance and improvement program to senior management and the board. Disclosure should include:
The scope and frequency of both the internal and external assessments.
The qualifications and independence of the assessor(s) or assessment team, including potential conflicts of interest.
Conclusions of assessors.
Corrective action plans.
- Reporting on the Quality Assurance and Improvement Program
Use of “Conforms with the International Standards for the Professional Practice of Internal Auditing”
1321
Disclosure of Nonconformance
1322
