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Introduction to the Standards | Attribute Standards | Performance Standards | Glossary

 

​Attribute Standards

Attribute Standards address the characteristics of organizations and parties performing internal audit activities.

Attribute Standards
  •   1000 – Purpose, Authority, and Responsibility

    The purpose, authority, and responsibility of the internal audit activity must be formally defined in an internal audit charter, consistent with the Definition of Internal Auditing, the Code of Ethics, and the Standards. The chief audit executive must periodically review the internal audit charter and present it to senior management and the board for approval.

    Interpretation

    The internal audit charter is a formal document that defines the internal audit activity's purpose, authority, and responsibility. The internal audit charter establishes the internal audit activity's position within the organization, including the nature of the chief audit executive's functional reporting relationship with the board; authorizes access to records, personnel, and physical properties relevant to the performance of engagements; and defines the scope of internal audit activities. Final approval of the internal audit charter resides with the board.  

    1000.A1 - The nature of assurance services provided to the organization must be defined in the internal audit charter. If assurances are to be provided to parties outside the organization, the nature of these assurances must also be defined in the internal audit charter.

    1000.C1 - The nature of consulting services must be defined in the internal audit charter.

  •   1010 – Recognition of the Definition of Internal Auditing, the Code of Ethics, and the Standards in the Internal Audit Charter

    The mandatory nature of the Definition of Internal Auditing, the Code of Ethics, and the Standards must be recognized in the internal audit charter. The chief audit executive should discuss the Definition of Internal Auditing, the Code of Ethics, and the Standards with senior management and the board.

  •   1100 – Independence and Objectivity

    The internal audit activity must be independent, and internal auditors must be objective in performing their work. 

    Interpretation

    Independence is the freedom from conditions that threaten the ability of the internal audit activity to carry out internal audit responsibilities in an unbiased manner. To achieve the degree of independence necessary to effectively carry out the responsibilities of the internal audit activity, the chief audit executive has direct and unrestricted access to senior management and the board. This can be achieved through a dual-reporting relationship. Threats to independence must be managed at the individual auditor, engagement, functional, and organizational levels. 

    Objectivity is an 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. Objectivity requires that internal auditors do not subordinate their judgment on audit matters to others. Threats to objectivity must be managed at the individual auditor, engagement, functional, and organizational levels.​

  •   1110 – Organizational Independence

    The chief audit executive must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities. The chief audit executive must confirm to the board, at least annually, the organizational independence of the internal audit activity.

    Interpretation

    Organizational independence is effectively achieved when the chief audit executive reports functionally to the board. Examples of functional reporting to the board involve the board:

    • Approving the internal audit charter;
    • Approving the risk based internal audit plan;
    • Approving the internal audit budget and resource plan;
    • Receiving communications from the chief audit executive on the internal audit activity’s performance relative to its plan and other matters;
    • Approving decisions regarding the appointment and removal of the chief audit executive;
    • Approving the remuneration of the chief audit executive; and
    • Making appropriate inquiries of management and the chief audit executive to determine whether there are inappropriate scope or resource limitations.

    1110.A1 - The internal audit activity must be free from interference in determining the scope of internal auditing, performing work, and communicating results.

  •   1111 – Direct Interaction With the Board

    The chief audit executive must communicate and interact directly with the board.​

  •   1120 – Individual Objectivity

    Internal auditors must have an impartial, unbiased attitude and avoid any conflict of interest.

    Interpretation

    Conflict of interest is a situation in which an internal auditor, who is in a position of trust, has a competing professional or personal interest. Such competing interests can make it difficult to fulfill his or her duties impartially. A conflict of interest exists even if no unethical or improper act results. A conflict of interest can create an appearance of impropriety that can undermine confidence in the internal auditor, the internal audit activity, and the profession. A conflict of interest could impair an individual's ability to perform his or her duties and responsibilities objectively.​

  •   1130 – Impairment to Independence or Objectivity

    If independence or objectivity is impaired in fact or appearance, the details of the impairment must be disclosed to appropriate parties. The nature of the disclosure will depend upon the impairment.

    Interpretation

    Impairment to organizational independence and individual objectivity may include, but is not limited to, personal conflict of interest, scope limitations, restrictions on access to records, personnel, and properties, and resource limitations, such as funding.

    The determination of appropriate parties to which the details of an impairment to independence or objectivity must be disclosed is dependent upon the expectations of the internal audit activity's and the chief audit executive's responsibilities to senior management and the board as described in the internal audit charter, as well as the nature of the impairment.

    1130.A1 - Internal auditors must refrain from assessing specific operations for which they were previously responsible. Objectivity is presumed to be impaired if an internal auditor provides assurance services for an activity for which the internal auditor had responsibility within the previous year.

    1130.A2 - Assurance engagements for functions over which the chief audit executive has responsibility must be overseen by a party outside the internal audit activity.

    1130.C1- Internal auditors may provide consulting services relating to operations for which they had previous responsibilities.

    1130.C2- If internal auditors have potential impairments to independence or objectivity relating to proposed consulting services, disclosure must be made to the engagement client prior to accepting the engagement.

  •   1200 – Proficiency and Due Professional Care

    Engagements must be performed with proficiency and due professional care.​

  •   1210 – Proficiency

    Internal auditors must possess the knowledge, skills, and other competencies needed to perform their individual responsibilities. The internal audit activity collectively must possess or obtain the knowledge, skills, and other competencies needed to perform its responsibilities.

    Interpretation

    Knowledge, skills, and other competencies is a collective term that refers to the professional proficiency required of internal auditors to effectively carry out their professional responsibilities. Internal auditors are encouraged to demonstrate their proficiency by obtaining appropriate professional certifications and qualifications, such as the Certified Internal Auditor designation and other designations offered by The Institute of Internal Auditors and other appropriate professional organizations.

    1210.A1 - The chief audit executive must obtain competent advice and assistance if the internal auditors lack the knowledge, skills, or other competencies needed to perform all or part of the engagement.

    1210.A2 - Internal auditors must have sufficient knowledge to evaluate the risk of fraud and the manner in which it is managed by the organization, but are not expected to have the expertise of a person whose primary responsibility is detecting and investigating fraud.

    1210.A3 - Internal auditors must have sufficient knowledge of key information technology risks and controls and available technology-based audit techniques to perform their assigned work. However, not all internal auditors are expected to have the expertise of an internal auditor whose primary responsibility is information technology auditing.

    1210.C1 - The chief audit executive must decline the consulting engagement or obtain competent advice and assistance if the internal auditors lack the knowledge, skills, or other competencies needed to perform all or part of the engagement.

  •   1220 – Due Professional Care

    Internal auditors must apply the care and skill expected of a reasonably prudent and competent internal auditor. Due professional care does not imply infallibility.

    1220.A1- Internal auditors must exercise due professional care by considering the:

    • Extent of work needed to achieve the engagement's objectives;
    • Relative complexity, materiality, or significance of matters to which assurance procedures are applied;
    • Adequacy and effectiveness of governance, risk management, and control processes;
    • Probability of significant errors, fraud, or noncompliance; and
    • Cost of assurance in relation to potential benefits.

    1220.A2 - In exercising due professional care internal auditors must consider the use of technology-based audit and other data analysis techniques.

    1220.A3- Internal auditors must be alert to the significant risks that might affect objectives, operations, or resources. However, assurance procedures alone, even when performed with due professional care, do not guarantee that all significant risks will be identified.

    1220.C1- Internal auditors must exercise due professional care during a consulting engagement by considering the:

    • Needs and expectations of clients, including the nature, timing, and communication of engagement results;
    • Relative complexity and extent of work needed to achieve the engagement's objectives; and
    • Cost of the consulting engagement in relation to potential benefits.
  •   1230 – Continuing Professional Development

    Internal auditors must enhance their knowledge, skills, and other competencies through continuing professional development.​

  •   1300 – Quality Assurance and Improvement Program

    The chief audit executive must develop and maintain a quality assurance and improvement program that covers all aspects of the internal audit activity.

    Interpretation

    A quality assurance and improvement program is designed to enable an evaluation of the internal audit activity's conformance with the Definition of Internal Auditing and the Standards and an evaluation of whether internal auditors apply the Code of Ethics. The program also assesses the efficiency and effectiveness of the internal audit activity and identifies opportunities for improvement.​

  •   1310 – Requirements of the Quality Assurance and Improvement Program

    The quality assurance and improvement program must include both internal and external assessments.

  •   1311 – Internal Assessments

    Internal assessments must include:

    • Ongoing monitoring of the performance of the internal audit activity; and
    • Periodic self-assessments or assessments by other persons within the organization with sufficient knowledge of internal audit practices.

    Interpretation

    Ongoing monitoring is an integral part of the day-to-day supervision, review, and measurement of the internal audit activity. Ongoing monitoring is incorporated into the routine policies and practices used to manage the internal audit activity and uses processes, tools, and information considered necessary to evaluate conformance with the Definition of Internal Auditing, the Code of Ethics, and the Standards.

    Periodic assessments are conducted to evaluate conformance with the Definition of Internal Auditing, the Code of Ethics, and the Standards.

    Sufficient knowledge of internal audit practices requires at least an understanding of all elements of the International Professional Practices Framework.​

  •   1312 – External Assessments

    External assessments must be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the organization. The chief audit executive must discuss with the board:

    • The form and frequency of external assessments; and
    • The qualifications and independence of the external assessor or assessment team, including any potential conflict of interest.

    Interpretation

    External assessments can be in the form of a full external assessment, or a self-assessment with independent external validation.

    A qualified assessor or assessment team demonstrates competence in two areas: the professional practice of internal auditing and the external assessment process. Competence can be demonstrated through a mixture of experience and theoretical learning. Experience gained in organizations of similar size, complexity, sector or industry, and technical issues is more valuable than less relevant experience. In the case of an assessment team, not all members of the team need to have all the competencies; it is the team as a whole that is qualified. The chief audit executive uses professional judgment when assessing whether an assessor or assessment team demonstrates sufficient competence to be qualified.

    An independent assessor or assessment team means not having either a real or an apparent conflict of interest and not being a part of, or under the control of, the organization to which the internal audit activity belongs.

  •   1320 – Reporting on the Quality Assurance and Improvement Program

    The chief audit executive must communicate the results of the quality assurance and improvement program to senior management and the board.

    Interpretation

    The form, content, and frequency of communicating the results of the quality assurance and improvement program is established through discussions with senior management and the board and considers the responsibilities of the internal audit activity and chief audit executive as contained in the internal audit charter. To demonstrate conformance with the Definition of Internal Auditing, the Code of Ethics, and the Standards, the results of external and periodic internal assessments are communicated upon completion of such assessments and the results of ongoing monitoring are communicated at least annually. The results include the assessor's or assessment team's evaluation with respect to the degree of conformance.

  •   1321 – Use of "Conforms with the International Standards for the Professional Practice of Internal Auditing"

    The chief audit executive may state that the internal audit activity conforms with the International Standards for the Professional Practice of Internal Auditing only if the results of the quality assurance and improvement program support this statement.

    Interpretation

    The internal audit activity conforms with the Standards when it achieves the outcomes described in the Definition of Internal Auditing, Code of Ethics, and Standards. The results of the quality assurance and improvement program include the results of both internal and external assessments. All internal audit activities will have the results of internal assessments. Internal audit activities in existence for at least five years will also have the results of external assessments.

  •   1322 – Disclosure of Nonconformance

    When nonconformance with the Definition of Internal Auditing, the Code of Ethics, or the Standards impacts the overall scope or operation of the internal audit activity, the chief audit executive must disclose the nonconformance and the impact to senior management and the board.

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