Global Internal Audit Standards

• Global Internal Audit Standards offer a framework for conducting and promoting internal auditing globally.
• The standards ensure consistency, quality, and professionalism in internal audit activities.
• Internal auditors are able to maintain objectivity, integrity, and competency because of these standards.
• Compliance with these standards enhances the effectiveness and credibility that the internal audit function has.
• The Institute of Internal Auditors (IIA) develops and maintains the International Standards for the Professional Practice of Internal Auditing (the Standards).
• These standards are principle-focused; they provide a framework to promote and perform a broad range of value-added internal audit services.
• All internal audit professionals are required to follow the standards.

Purpose of the Standards

• Provide a framework for performing and promoting a broad range of value-added internal audit services.
• The standards establish a basis for evaluating the performance of internal audits.
• Improved organizational processes and operations are fostered by these standards.

Types of Standards

• Attribute Standards focus on the characteristics of organizations and people performing internal auditing.
• Performance Standards describe the nature of internal auditing and give quality criteria to use when measuring the performance of these services.
• Implementation Standards apply the Attribute and Performance Standards to different engagement types.

Attribute Standards

• 1000 – Purpose, Authority, and Responsibility: The internal audit function needs to have a formal, written charter defining its purpose, authority, and responsibility.
• 1100 – Independence and Objectivity: Internal auditors must be independent and objective when performing their work.
  • An auditor's organizational status and reporting lines help maintain independence.
  • Objectivity requires an unbiased mental attitude.
• 1200 – Proficiency and Due Professional Care: Internal auditors are required to possess the knowledge, skills, and other competencies needed to perform their responsibilities.
  • Due professional care demands reasonable assurance, not infallibility or absolute assurance.
• 1300 – Quality Assurance and Improvement Program: The internal audit function has to have a quality assurance and improvement program covering all aspects of the internal audit activity.
  • Internal and external assessments are included in this program.

Performance Standards

• 2000 – Managing the Internal Audit Activity: The chief audit executive (CAE) must effectively manage the internal audit activity to ensure it adds value to the organization.
  • Effectively managing the internal audit activity means planning, organizing, staffing, directing, and controlling the internal audit activity.
• 2100 – Nature of Work: The internal audit activity is required to evaluate and contribute to improvements of governance, risk management, and control processes.
  • Internal auditors should use a systematic and disciplined approach.
• 2200 – Engagement Planning: Internal Auditors are required to develop and document a plan for each engagement; this includes objectives, scope, timing, and resource allocations.
  • Planning takes into account the organization's strategies, risks, and controls.
• 2300 – Performing the Engagement: Internal auditors are required to identify, analyze, evaluate, and document sufficient information in order to achieve the engagement’s objectives.
  • Gathering relevant and competent evidence is part of this process.
• 2400 – Communicating Results: Internal auditors are required to communicate the results of engagements.
  • Communications need to be accurate, objective, clear, concise, constructive, and timely.
• 2500 – Monitoring Progress: The CAE has to establish a system to monitor the disposition of results communicated to management.
  • This ensures management takes appropriate corrective actions.
• 2600 – Communicating the Acceptance of Risks: The CAE is required to discuss the matter with senior management when they conclude that management has accepted a level of risk that may be unacceptable to the organization.
  • The CAE has to communicate the matter to the board if the matter is not resolved.

Implementation Standards

• Implementation Standards expand upon the Attribute and Performance Standards by providing requirements applicable to assurance or consulting services.
• Assurance services involve the internal auditor’s objective assessment of evidence to provide independent opinions or conclusions regarding an entity, operation, function, process, system, or other subject matter.
• Consulting services are advisory in nature and are generally performed at the specific request of an engagement client.

Interpretation of the Standards

• Each standard includes interpretations that clarify terms or concepts within the standard.
• These interpretations provide specific guidance to assist internal auditors in applying the standards.

Code of Ethics

• The IIA's Code of Ethics is integral to the Standards.
• The code outlines the principles and expectations that govern the behavior of Internal Auditors.
• Principles such as integrity, objectivity, confidentiality, and competency are included in the Code of Ethics.
• Internal auditors are required to adhere to the Code of Ethics in order to maintain the ethical standards of the profession.

Quality Assurance and Improvement Program

• The Quality Assurance and Improvement Program (QAIP) is designed to enable an evaluation of the internal audit activity’s conformance with the Standards and an evaluation of whether internal auditors apply the Code of Ethics.
• The QAIP should include both internal and external assessments.
• Internal assessments are ongoing and periodic reviews of the internal audit activity.
• External assessments are conducted by a qualified, independent assessor or assessment team from outside the organization.

Benefits of Adhering to the Standards

• The internal audit function has enhanced credibility and reliability.
• Improved quality and consistency of internal audit work.
• There is increased confidence among stakeholders.
• Internal audit activities are better aligned with organizational goals and objectives.
• There is greater effectiveness in identifying and mitigating risks.
• Enhanced value-added contributions to the organization.
• This facilitates the continuous improvement of internal audit practices.

Challenges in Implementing the Standards

• There can be a lack of resources and support from management.
• Auditors may have insufficient training and competency.
• There may be difficulty in maintaining independence and objectivity.
• The organization may experience resistance to change.
• There may be an inadequate understanding of the standards.
• It may be difficult to measure the effectiveness of internal audit activities.

Continuous Improvement

• The Standards are periodically reviewed and updated by the IIA to reflect changes in the business environment and best practices.
• Internal auditors should stay informed about the latest developments and revisions to the Standards.
• Continuous improvement in internal audit practices is essential for maintaining relevance and effectiveness.