1 Quality Assessment Manual Chapter 1

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framework internal audit
  1 O  VERVIEW  One of internal audit’s major assets is its credibility with stakeholders. o provide credible assistance and constructive challenge to management, internal auditors must be perceived as professionals. Professionalism requires conforming to a set of professional standards. Tis chapter provides an overview of Te IIA’s International Standards for the Professional Practice of Internal Auditing   ( Standards  ) and the other documents that make up the International Professional Practices Framework (IPPF). It explains how they have evolved as the profes-sion has matured and how their application should be tailored to each organization without compromising conformance with the Standards  . In particular, it presents and discusses the 1300 series of Standards   that deals specifically with quality assurance. > Te Framework for Quality Assurance 7 Chapter  S  TANDARDS   R  EQUIRE  Q  UALITY    A  SSURANCE  F OCUS Chief audit executives (CAEs) need assurance that their internal audit department and each member of the staff conform to all mandatory elements of the IPPF, and they need to demonstrate this conformance to their stakeholders. Te only way to meet these needs is  with a comprehensive Quality Assurance and Improvement Program (QAIP) that includes ongoing and periodic internal assessments and periodic external assessments by qualified independent parties. Standards   Have Evolved With the Profession Te steadily expanding scope and global reach of internal auditing has both been reflected in and fostered by changes in Te IIA’s Standards  . Te biggest change occurred in 1999  with a new definition of internal auditing and the development of the Professional Practices Framework, which became the IPPF in 2009. Te definition adds consulting to internal audit’s role and expands its scope from internal control to governance, risk management, and control processes. Evaluating risk management and governance processes is much more challenging and meaningful than control alone. It requires internal audit to operate at a higher, more stra-tegic level. o operate at this level, internal auditors need a higher level of credibility with their stakeholders. Quality Assurance Has Evolved With the Standards  Te srcinal Standards   (1978) said “the director of internal auditing should establish and main-tain a quality assurance program” that includes an external quality assessment (QA) every three years. Te three-year time frame was chosen to be in line with guidance from the U.S. Government Accountability Office (U.S. GAO). In the 2002 revision of the Standards,  Te IIA changed the time frame to five years, as this was considered more appropriate for internal auditing. Quality Assessment Manual for the Internal Audit Activity 8  T HE  IPPF Quality internal auditing is defined by the IPPF, which consists of mandatory and strongly recommended guidance. Mandatory Guidance Te mandatory guidance is considered to be essential for the professional practice of internal auditing. All mandatory guidance is submitted for review by the entire global profession through the exposure draft process. It consists of three components:ã Definition of Internal Auditing  : “Internal auditing is an independent, objec-tive assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.” ã Code of Ethics  :   Te Principles and Rules of Conduct that define ethical behavior for a professional internal auditor.ã International Standards for the Professional Practice of Internal Auditing  : Te Standards   are the central criteria for internal and external quality assessments. 9 Chapter One  The Framework for Quality Assurance  Strongly Recommended Guidance Te strongly recommended guidance helps internal auditors understand and apply the Standards  . It may also point the way toward going beyond conformance to a higher level of adding value or address issues of concern not related to a specific standard .  Practice  Advisories and Practice Guides are available for IIA members on Te IIA’s websites: global.theiia.org and na.theiia.org. Position Papers are available to both members and nonmem-bers on the same websites.ã Practice Advisories assist internal auditors in applying the Definition of Internal Auditing, the Code of Ethics, and the Standards  , and promoting best practices. Practice Advisories address internal audit’s approach, method-ologies, and consideration, but do not detail processes or procedures. Tey include practices relating to international, country, or industry-specific issues, specific types of engagements, and legal or regulatory issues. Te References section of this Quality Assessment Manual   contains a list of the guidance from the Practice Advisories related to quality assurance. ã Practice Guides   provide detailed guidance for conducting internal audit activ-ities. Tey include processes and procedures, tools and techniques, programs, and step-by-step approaches, as well as examples of deliverables. ã Position Papers   assist a wide range of interested parties—including those not in the internal audit profession—in understanding significant governance, risk, or control issues, and delineating the related roles and responsibilities of internal auditing. We include Standard 1300 in full because it defines the requirements for a quality assurance and improvement program. Please note that this is from the 2013 Standards   revision. Please consult Te IIA’s website for the most current Standards  . Quality Assessment Manual for the Internal Audit Activity 10
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