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Chapter 2
The Professional Practices
Framework: Ethics andStandards of Practice
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Chapter 2 Learning Objectives
Understand the structure of the Professional PracticesFramework
and type of guidance it provides.
Apply the professional guidance in the practice of
internalauditing.
Use the Professional Practices Framework to address issueswhich
arise in internal audit practice.
Understand the ethical principles and behavioral norms
relevantto the profession and practice of internal auditing.
Identify the essential characteristics of functions,
organizations,and individuals for the performance of effective
internal auditactivities.
Understand the nature of internal audit activities and the
criteriaagainst which performance of these activities can be
measured.
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The Professional Practices Framework
Components:
Code of ethics
Attribute standards
Performance standards
Implementation standards
Practice advisories (non mandatory guidance) Other guidance (non
mandatory guidance)
See Exhibit 2-1
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Copyright: Internal Auditing: Assurance and Consulting Services,
by The Institute of Internal Auditors Research Foundation, 247
Maitland
Avenue, Altamonte Springs, Florida 32701-4201 U.S.A.
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Code of Ethics
Components:
Principles
Rules of conduct
The rules describe 12 behavioral norms that the internal
auditor
should follow to put the Principles into practice.
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Attribute Standards
Definition:
Describe the defining characteristics of organizations, as well
asthe individuals performing internal audit services.
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Performance Standards
Definition:
Describe the nature of internal audit services and provide
qualitycriteria against which the performance of these services can
bemeasured.
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Implementation Standards
Definition:
Apply to specific types of internal audit services
The framework envisions potentially numerous sets
ofImplementation Standards, such as standards for
specializedindustries
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Copyright: Internal Auditing: Assurance and Consulting Services,
by The Institute of Internal Auditors Research Foundation, 247
Maitland
Avenue, Altamonte Springs, Florida 32701-4201 U.S.A.
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Breaches of the Code of Ethics
Censure
Suspension of the membership and/or certification
Expulsion and/or revocation of certification
IIAs Ethics Committee
Violation of any of the Code of Ethics will preclude the
delivery ofvalue addes and, thus, effective internal audit
services.
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The Attributes Standards
Purpose, authority, and responsibility - the function should
have
a charter that states the functions purpose, authority,
andresponsibilities and specifies the types of assurance
andconsulting activities provided.
Independence and objectivity Independence the freedom of
conditions that threaten objectivity or the
appearance of objectivity Objectivity an unbiased mental
attitude (not to subordinate their judgment)
Proficiency and due professional care Proficiency knowledge and
skills for the function to fulfill its responsibilities
Due professional care applying the care and skill expected of a
reasonablyprudent and competent internal auditor
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Copyright: Internal Auditing: Assurance and Consulting Services,
by The Institute of Internal Auditors Research Foundation, 247
Maitland
Avenue, Altamonte Springs, Florida 32701-4201 U.S.A.
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The Performance Standards
Managing the internal audit function
Nature of work Engagement planning
Performing the engagement
Communicating results
Monitoring progress
Managements acceptance of risks
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Copyright: Internal Auditing: Assurance and Consulting Services,
by The Institute of Internal Auditors Research Foundation, 247
Maitland
Avenue, Altamonte Springs, Florida 32701-4201 U.S.A.
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The Practice Advisories
Non mandatory
Provide more specific guidance
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Copyright: Internal Auditing: Assurance and Consulting Services,
by The Institute of Internal Auditors Research Foundation, 247
Maitland
Avenue, Altamonte Springs, Florida 32701-4201 U.S.A.
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