The Institute of Internal Auditors (IIA) proposed changes Monday to its standards for internal audit professionals, with a goal of helping practitioners meet the evolving demands of today’s dynamic business environment.
The proposed changes to the International Standards for the Professional Practice of Internal Auditing focus on:
- Enhancing existing standards on communications and quality assurance.
- Creating new standards addressing objectivity in assurance and consulting roles, as well as addressing new roles internal audit functions are taking on.
- Aligning existing standards to a new set of core principles incorporated last year into the International Professional Practices Framework.
“The demands on internal audit are evolving rapidly, and The IIA is working diligently to make sure the standards and [professional practices framework] reflect that evolution,” IIA President and CEO Richard Chambers said in a news release.
Key additions under the proposed changes would include the following:
- A chief audit executive would be required to disclose and discuss implications with the board if there is any interference in determining the scope of internal auditing, performing work, or communicating results.
- Safeguards would be required to limit impairments to independence or objectivity when the chief audit executive has or is expected to have roles and/or responsibilities that fall outside internal auditing.
- Internal audit would be permitted to provide assurance services where it had previously performed consulting services, provided that the nature of the consulting did not impair objectivity and provided that individual objectivity is managed when assigning resources to the engagement.
- Specific disclosures to senior management and the board regarding results of the quality assurance and improvement programme would be required. The disclosures would include the scope and frequency of the internal and external assessments, conclusions of assessors, corrective action plans, and the qualifications and independence of the assessors or assessment team, including potential conflicts of interest.
- An overall opinion that is issued would be required to take into account the strategies, objectives, and risks of the organisation, in addition to the expectations of senior management, the board, and other stakeholders.
Comments can be made through April 30th at The IIA’s website. After reviewing comments, The IIA plans to approve final changes in the third quarter of this year. The modified standards are scheduled to be announced on October 1st and take effect on January 1st 2017.
—Ken Tysiac (email@example.com) is a CGMA Magazine editorial director.