Domain II: Ethics & Professionalism, Principle 2 Maintain Objectivity Flashcards
Principle 2 Maintain Objectivity
1
Q
Principle 2 Maintain Objectivity
Internal auditors maintain an impartial and unbiased attitude when performing internal audit services and making decisions.
Broad Description of Principle 2
A
- Definition: Objectivity means having an unbiased mindset, enabling internal auditors to make fair judgments and fulfill their roles effectively.
- Importance: A strong internal audit function helps auditors remain objective in their assessments and decisions.
2
Q
Standard 2.1 Individual Objectivity
Requirements
Mandatory practices for IA
A
- Professional Objectivity: Internal auditors must maintain objectivity in all audit services.
- Impartial Mindset: Auditors should apply an impartial and unbiased attitude.
- Balanced Assessments: Judgments must be based on balanced evaluations of all relevant circumstances.
- Bias Management: Auditors must be aware of and manage potential biases
3
Q
Standard 2.1 Individual Objectivity
Considerations for Implementation
Common practices to consider when applying the requirements.
A
- Objectivity: Auditors must work without outside influence on their judgment.
- Standards and Policies: Global Internal Audit Standards provide guidance for fair evaluation of information.
- Training: Ongoing education helps auditors recognize threats to their objectivity.
- Impartial Mindset: An unbiased approach is essential for accurate advice to management.
- Awareness of Influences: Understanding how situations and relationships impact objectivity is crucial.
- Cognitive Biases: Be mindful of misinterpretations and assumptions affecting evaluations.
- Common Biases:
1. Self-review Bias: Overlooking errors in one’s own work.
2. Familiarity Bias: Relying on past experiences, reducing skepticism.
3. Prejudice/Unconscious Bias: Misjudging information based on preconceived notions about characteristics.
4
Q
Standard 2.1 Individual Objectivity
Examples of Evidence of Conformance
Proof that the requirements are being followed.
A
- IA Charter References: Auditors’ objectivity responsibilities.
- Policies: Objectivity-related guidelines.
- Training Records: Logs of objectivity training.
- Attestation Forms: Confirmation of understanding objectivity.
- Conflict Disclosures: Records of potential conflicts of interest.
- Supervisory Notes: Documentation from reviews and mentoring
5
Q
Standard 2.2 Safeguarding Objectivity
Requirements
Mandatory practices for IA
A
- Avoid Impairments: Identify and avoid anything that harms objectivity.
- No Gifts or Rewards: Do not accept items that could compromise objectivity.
- Conflict of Interest: Avoid personal or external pressures that affect judgment.
- Past Responsibilities: Cannot evaluate activities they managed in the last 12 months.
- Transitioning Roles: Ensure prior advisory work doesn’t impair objectivity; have independent oversight.
- Disclosure: Inform parties of potential conflicts before taking advisory roles.
- Methodology Establishment: CAE should create methods to address objectivity issues.
- Discussion & Action: Discuss potential impairments and take steps to resolve them.
6
Q
Standard 2.2 Safeguarding Objectivity
Considerations for Implementation
Common practices to consider when applying the requirements.
A
- Maintain Objectivity: Avoid any situations that compromise impartiality.
- Conflict of Interest: Avoid personal interests that may bias audits.
- Gift Policies: Follow strict guidelines on accepting gifts.
- Bias-Free Evaluations: Design reviews to eliminate management influence.
- Independent Staffing: Ensure auditors have no recent ties to the activities under review.
- Awareness and Discussion: Identify potential impairments in planning and supervision.
- Disclosure: Report any unavoidable impairments
7
Q
Standard 2.2 Safeguarding Objectivity
Examples of Evidence of Conformance
Proof that the requirements are being followed.
A
- Policies/Procedures: Guidelines for identifying impairments.
- Training Records: Proof of objectivity training.
- Auditor Attestation: Documentation of impairments status.
- Stakeholder Feedback: Surveys on objectivity perceptions.
- Review Notes: Records from supervisory reviews.
- Remuneration Plan: Details of compensation structures.
- Board Minutes: Impairment discussions.
- Alternative Plans: Strategies for unavoidable impairments.
- Quality Assessments: Results from independent evaluations.
8
Q
Standard 2.3 Disclosing Impairment to Objectivity
Requirements
Mandatory practices for IA
A
- Prompt Impairment Disclosure Required: Quickly report any loss of objectivity.
- Notify CAE of Impairments: Inform the Chief Audit Executive or supervisor about impairments.
- CAE Discusses and Decides Actions: The CAE discusses issues with management and the board and decides on corrective actions.
- Post-Audit Reliability Review Needed: Discuss the issue with stakeholders if reliability is affected after an audit.
- CAE Must Disclose Self-Impairment: The CAE must disclose their own impairment to the board
9
Q
Standard 2.3 Disclosing Impairment to Objectivity
Considerations for Implementation
Common practices to consider when applying the requirements.
A
- Impairment Management and Disclosure: Internal audit methods outline impairment actions, guided by the CAE and board.
- Managing Impairments: Options include reassigning auditors, rescheduling, adjusting scope, or outsourcing.
- Perception of Impairments: Discuss with management and document decisions.
- Additional Guidance: Standard 7.1 Organizational Independence details further CAE role requirements
10
Q
Standard 2.3 Disclosing Impairment to Objectivity
Examples of Evidence of Conformance
Proof that the requirements are being followed.
A
-
Internal Audit Methodologies
Documents detailing procedures for disclosing objectivity impairments. -
Impairment Disclosure Documentation
Records confirming or disclosing objectivity impairments. -
Disclosure Records and Responses
Logs of impairment disclosures and responses from management or the board.
