TIAPS Module 1 Audit and Assurance workbook

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To establish individual objectivity requires that auditors have “an impartial, unbiased attitude and avoid any conflict of interest.” This involves adhering to a code of ethics and professional standards, maintaining professional competency, and applying due professional care and professional skepticism. It also means auditors must be part of an independent internal audit function. The requirements for independence and objectivity are summarized below. Requirements for the Independence of the Internal Audit Function • Internal audit mandate (as defined in charter or legislation). • Access to necessary people, resources, and information. • Freedom from interference. • Functional reporting by head of internal audit to an appropriate level in organization (ideally governing body). • Administrative reporting to senior management (ideally CEO). • Application of safeguards for independence when threatened. Requirements for the Objectivity of Internal Auditors • Independence of internal audit function. • Freedom from conflicts of interest. • Competency. • Objective mindset. • Professional skepticism. • Due professional care. • Unwavering integrity. • Adherence to professional standards. • Application of disciplined and systematic procedures. The internal audit mandate and charter are discussed in B.2. Independence and objectivity – including the appearance of independence and objectivity – are important for the credibility and authority of the internal audit function and of individual auditors. It should be clear to internal and external stakeholders that the opinion of the internal audit function is reliable and has not been concocted to suit the personal interests of auditors, managers, or members of the governing body. Internal audit provides transparency through an unbiased and insightful assessment of past, current, and future circumstances. This enables: • Managers to make well-informed decisions. • Members of the governing body to exercise oversight and intervene where necessary. • External stakeholders to trust in reports regarding the organization’s performance, position, and prospects and so hold managers and leaders to account. If the internal audit function is not sufficiently independent of management, it becomes indistinguishable from a second line unit. In this capacity it can provide value but is robbed of its distinct characteristic. Its authority is subordinated to senior management and its scope and capacity potentially limited. The findings and recommendations of auditors whose objectivity is or appears to be impaired can be disregarded or dismissed more easily. Trust is established on the basis that internal auditors operating outside of the management structure, and there is confidence their recommendations are made in the best interests of the organization. 28
B.1.1 Independence, Objectivity, and the Code of Ethics IIA Internal Audit Competency Framework Ethical Behavior: General Awareness: Describe the importance of a code of ethics for internal auditors; identify the principles of The IIA’s Code of Ethics. Applied Knowledge: Demonstrate individual conformance with The IIA’s Code of Ethics. Expert: Assess the internal audit activity’s conformance with The IIA’s Code of Ethics; recommend strategies to maintain and promote the highest ethical standards for internal auditors and the internal audit activity. 24 Unflinching adherence to an ethical code is a hallmark of a true professional. It is also essential for establishing trust in internal auditing. Auditors must ensure their integrity, objectivity, confidentiality, and competency. In fact, the principle of auditor objectivity is considered so important it is found throughout the IPPF. Independence of the internal audit function is also heavily referenced, as shown in the table below. IPPF Elements Reference to Auditor Objectivity Reference to Independence of the internal Audit Function The Mission of Internal Auditing Yes No Core Principles for the Professional Practice of Internal Auditing Yes Yes Definition of Internal Auditing Yes Yes Code of Ethics Yes No International Standards for the Professional Practice of Internal Auditing Yes (1100, 1112, 1120, 1130, 2000, 2050) Yes (1100, 1110, 1112, 1130, 2060) Organizations may have their own codes of ethics and conduct describing acceptable and unacceptable behaviors. Auditors must demonstrate the highest levels of personal integrity. It is sometimes easy to justify small breaches to ourselves, such as taking office supplies for personal use, but to be beyond reproach requires faithful observance even of seemingly insignificant expectations. Through self-awareness, peer review, and supervision, auditors should continually reflect on their attitudes, behaviors, decisions, and actions to eliminate any potential deviation from professional objectivity in the exercise of their duties. 24 Internal Audit Competency Framework, The IIA, 2022. 29
Page 1 and 2: Module 1: Audit and Assurance TIAPS
Page 3 and 4: Table of Contents Module 1: Audit a
Page 5 and 6: Relevant Standards Reference is mad
Page 7 and 8: • Close scrutiny. The activities
Page 9 and 10: A.2 Public Sector Governance IIA In
Page 11 and 12: The need for governance arises for
Page 13 and 14: Although developed for government a
Page 15 and 16: A.3 Governance Models When evaluati
Page 17 and 18: defensive aspects to minimize negat
Page 19 and 20: A.3.3 CIPFA International Framework
Page 21 and 22: 8. Ensure that its arrangements for
Page 23 and 24: • Consideration of overlapping in
Page 25 and 26: A.3: Reflection Which model or mod
Page 27: Although they are related, the prin
Page 31 and 32: B.1: Reflection Is it possible to
Page 33 and 34: According to The IIA Position Paper
Page 35 and 36: B.2: Reflection When was the last t
Page 37 and 38: When independence or objectivity ar
Page 39 and 40: B.4 Safeguards for Independence and
Page 41 and 42: In other cases, there is no audit c
Page 43 and 44: C. Assurance and Advisory Engagemen
Page 45 and 46: It is common to build an allowance
Page 47 and 48: The following list is taken from Sa
Page 49 and 50: helping managers developing control
Page 51 and 52: C.1.5 Internal Audit Opinions Audit
Page 53 and 54: Leadership and Communication Intern
Page 55 and 56: C.2 Auditing Governance The IIA Sup
Page 57 and 58: C.2: Reflection How does your inter
Page 59 and 60: Fraud may be perpetrated via measur
Page 61 and 62: circumstances (unethical and often
Page 63 and 64: Management Issues • Lack of area
Page 65 and 66: Risk management techniques can be a
Page 67 and 68: IT controls may be manual, automate
Page 69 and 70: The IIA’s Cybersecurity Toolkit d
Page 71 and 72: C.3: Reflection Fraud: How are susp
Page 73 and 74: Global Perspectives and Insights -
Page 75: CIPFA: 77 Mansell Street, London E1

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