TIAPS Module 1 Audit and Assurance workbook

Four foundational principles are at the heart of governance and are inter-related.
Value generation: Pursuit of purpose can be characterized as value creation, whether
that value is financial, nonfinancial, or both. Public sector entities share a common
purpose of serving the public good through the provision of direct and indirect services.
In creating value, they must manage their financial and other resources. State-owned
enterprises (e.g., publicly owned transportation, utilities, and broadcasting companies)
may operate as commercial or quasi-commercial organizations and compete on that
basis with their private sector counterparts but their purpose is still linked to public
service and any profits generated are used to subsidize costs to the public or for
investment in other public benefits.
Strategy: The purpose of an organization tends to be broad and may be satisfied in
different ways. It is necessary to develop strategies for fulfilling the purpose by
establishing and prioritizing goals and applying resources – which are always finite –
accordingly. Strategy typically is formed within a long-term perspective over multiple
years.
Accountability: As discussed in A.1, public officials are accountable in that they owe a
duty of care to their stakeholders – employees, suppliers, service users, taxpayers, and
citizens. That accountability needs to be realized through transparency and
consequences. Being held to account means accepting responsibility for behaviors,
decisions, and actions, and their ensuing impact, and receiving fair treatment on this
basis.
Oversight: As a consequence of accountability, those charged with governance will both
need and desire to exercise oversight. If you are going to be held to account, you will be
expected to oversee – and will have a vested interest in overseeing – what is taking
place and intervene as and when needed. Typically, a governing body is unable to
observe all activity directly. It relies on reports from management, internal auditors,
external auditors, and others. Members of the governing body will also ask searching
questions to satisfy their responsibilities and wishes for exercising oversight.
These foundational principles of governance are enabled by the primary governance
principles of leadership, stakeholder engagement, risk governance, the application of data to
inform decision-making, and social responsibility, all with the intention of achieving viability
and performance over time.
Finally, in the ISO model the governance outcomes are defined as effective performance,
responsible stewardship, and ethical behavior. Successful leadership and ethical leadership
are regarded as co-dependents.
A.3.2 The IIA’s Three Lines Model
The 2020 Three Lines Model is an update of the well-known three lines of defense. In
making the switch, the new model emphasizes the positive nature of governance, risk
management, and internal control in supporting organizational success in addition to the
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