Components: The CAE is responsible for ensuring that Deming Cycle can be Internal auditors must enhance Internal

e can be Internal auditors must enhance
(a) internal assessments,
(b) external assessments,
(c) communication of QAIP results,
(d) proper use of a conformance
statement, and
(e) disclosure of nonconformance.
The freedom from conditions that
threaten the ability of the internal audit
activity to carry out internal audit
responsibilities in an unbiased manner.
Functional reporting to the
board (at least annual meeting
Administrative reporting
to senior management
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.
Internal auditors must apply the care and skill
the internal audit activity conducts: used to establish the their knowledge, skills, and other expected of a reasonably prudent and competent
(a) Internal assessments (ongoing QAIP (4 steps: Plan-Do- competencies through continuing internal auditor, through: a. conformance with
monitoring and periodic self- Check-Act Cycle) professional development Code of Ethics, b. systematic and disciplined
assessments) approach included in IA policies & procedures, c.
(b) External assessments (independent CIAs demonstrate their continuing application of the IPPF’s Mandatory Guidance
assessment every 5 years) professional development by Considerations:
completing continuing 1. Needs and expectations of clients.
(H) QUALITY professional education (CPE). 2. Relative complexity and extent of work needed.
ASSURANCE AND CIAs must complete CPE annually
3. Cost of the consulting in relation to benefits
IMPROVEMENT (40 hours for Practicing & 20
Definition PROGRAM (QAIP) hours for nonpracticing) including
(A) at least 2 hours of ethics training).
(F) DUE PROFESSIONAL CARE
INDEPENDENCE
(G) Continuing
Achieve Independence Practices will help the CAE to identify
CAE must communicate the Professional the available resources:
through Dual Reporting results of QAIP to senior Development A. Hiring practices
management and the board.
B. Periodic skills assessments
The internal audit activity
Internal C. Staff performance appraisals
conforms with Standards only if
supported by the results of QAIP. Resources D. Continuing professional development
Definition
Professional Ethics

Is any “relationship that is, or

SU 2 : INDEPENDENCE, Internal Audit Management
External IPPF
appears to be, not in the best OBJECTIVITY, PROFICIENCY, Resources Technical
interest of the organization Conflict of Governance, Risk and Control
Interest
(B) OBJECTIVITY CARE, AND QUALITY Expertise
Organization may Business Acumen
Internal auditors must avoid outsource all, or some Communication
any conflict of interest of the functions of the Personal
internal audit activity.
Persuasion & Collaboration
(C) IMPAIRMENT TO (E) INTERNAL Skills
Objectivity refers to impartial and INDEPENDENCE AND However, oversight of Critical Thinking
AUDIT
unbiased mindset, which is facilitated by Aspects and responsibility for Internal Audit Delivery
OBJECTIVITY RESOURCES
avoiding conflicts of interest the internal audit activity
If independence or objectivity is must not be outsourced
Improvement & Innovation
Many CAEs have an internal audit policy impaired in fact or appearance, the
manual or handbook that may describe: details of the impairment must be Competency Framework
disclosed to appropriate parties (10 core competencies)
(D) PROFICIENCY
a. Critical importance of objectivity Examples of Examples of
independence objectivity
b. Situations that could undermine objectivity impairments impairments
c. Actions the internal auditor should 1. The CAE has broader functional 1. An internal auditor audits an area Meaning
take if (s)he becomes aware of a current responsibility than internal audit in which he or she recently worked
or potential objectivity concern Internal auditors must
2. The CAE does not have direct 2. An internal auditor audits an area where possess the knowledge,
d. Reporting requirements, where each communication or interaction with the board a relative or close friend is employed skills, and other
internal auditor periodically considers & competencies needed to
3. The budget for the internal audit activity is 3. An internal auditor assumes, without evidence, that
discloses conflicts of interest perform Their individual
reduced to the point that internal audit cannot an area being audited has effectively mitigated risks
responsibilities. Internal
When assigning internal auditors to specific fulfill its responsibilities as outlined in the charter
4. An internal auditor modifies the planned approach or audit activity is considered
engagements, CAE should avoid assigning results based on the undue influence of another person
4. Scope limitation (restriction placed on a. proficient if it collectively
team members who may have a conflict
internal audit charter, b. access to records, possesses or obtains the
5. Accept fees, gifts, or entertainment from an employee,
CAE needs to be thoughtful in designing the internal personnel, and physical properties, c. Approved competencies needed to
client, customer, supplier, or business associate
audit performance evaluation and compensation engagement work schedule, or d. Approved perform its responsibilities
staffing plan and financial budget)
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