Institute of Internal Auditors

The Institute of Internal Auditors (IIA) is the internal audit profession's most widely
recognized advocate, educator, and provider of standards, guidance, and certifications.
Established in 1941, The IIA today serves more than 190,000 members from more than
170 countries and territories. The IIA's global headquarters are in Lake Mary, Fla., United
States.

Certified Internal Auditor

The CIA (Certified Internal Auditor) is the primary professional designation offered by The
IIA. The CIA designation is a globally recognized certification for internal auditors and is a
standard by which individuals may demonstrate their competency and professionalism in
the internal audit field.
Earning the CIA qualification is intended to demonstrate a professional knowledge of the
internal audit profession. CIAs are required to take continuing education courses.
Many CIAs today are senior internal audit managers, Vice Presidents, Directors and Chief
Audit Executives in top global MNC companies driving internal audit functions in their
respective companies.

Professional Standards: the International Professional Practices Framework[edit]

The IIA has two levels of professional guidances: (1) Mandatory Guidance (including the
Standards) and (2) Strongly Recommended Guidance. The two levels of guidance
constitute the IIA's International Professional Practices Framework (IPPF).
Mandatory Guidance: the Definition of Internal Auditing, the Code of ethics[2] and the
Standards[3][edit]
These guidelines are mandatory for IIA members and internal audit organizations
claiming to complete audits to IIA technical standards around the world. The guidelines
and recommendations are recorded in what is referred to as the "Red Book."
• The Definition: Internal auditing is an independent, objective 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.
• The four principles of the IIA's Code of
Ethics are Integrity, Objectivity, Confidentiality and Competency.
• The International Standards for the Professional Practice of Internal Auditing:

New IPPF 2015 Chartered Institute of Internal Auditors Following a consultation that began in 2013, IIA
Global's board of directors have approved a set of enhancements to strengthen the ongoing relevance of the
International Professional Practice Framework (IPPF). The existing content of the IPPF has been retained and
new features and changes to the overall structure introduced. Here is the new structure of the IPPF with a
summary of the key changes. 1 © Chartered Institute of Internal Auditors Mission Statement The addition of a
Mission of Internal Auditing as part of the IPPF, worded as follows: To enhance and protect organizational
value by providing risk-based and objective assurance, advice and insight. The Definition, Standards and Code
of Ethics are unchanged.
Core Principles The addition of Core Principles for the Professional Practice of Internal Auditing as part of the
mandatory elements of the IPPF
1. Demonstrates integrity.
2. Demonstrates competence and due professional care.
3. Is objective and free from undue influence (independent).
4. Aligns with the strategies, objectives, and risks of the organization.
5. Is appropriately positioned and adequately resourced.
6. Demonstrates quality and continuous improvement.
7. Communicates effectively. 8. Provides risk-based assurance.
9. Is insightful, proactive, and future-focused.
10.Promotes organizational improvement.

Mission statement
Chartered Institute of Internal Auditors
To enhance and protect organizational value by providing risk-based and objective assurance, advice and
insight.

About the mission

The Mission Statement to the IPPF provides a clear and succinct description of what internal audit aspires to
achieve within organizations. Like a typical mission statement, the Mission of Internal Auditing describes
internal audit’s primary purpose and overarching goal.
Achievement of the mission is supported by the entire IPPF: the Core Principles, the Definition, the Code of
Ethics, the Standards, and all guidance.

Definition of internal auditing

Chartered Institute of Internal Auditors
Internal auditing is an independent, objective assurance and consulting activity designed to add value and
improve an organisation's operations. It helps an organisation accomplish its objectives by bringing a
systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and
governance processes.
About the definition
The Definition of Internal Auditing is the statement of fundamental purpose, nature and scope of internal
auditing. The definition is authoritative guidance for the internal audit profession from the Global Institute of
Internal Auditors. It is part of the International Professional Practices Framework.

Code of Ethics
Chartered Institute of Internal Auditors
The purpose of the Code is to promote an ethical culture in the profession of internal auditing. A code of ethics
is necessary and appropriate for the profession of internal auditing, founded as it is on the trust placed in its
objective assurance about risk management, control, and governance.

The Institute's Code of Ethics provides principles and rules of conduct under four headings:
• Integrity
• Objectivity
• Confidentiality
• Competency

The Rules of Conduct describe behaviour norms expected of internal auditors. These rules are an aid to
interpreting the Principles into practical applications and are intended to guide the ethical conduct of internal
auditors. Below they are set out together with the principle they interpret.
The Code of Ethics provides guidance to internal auditors serving others. 'Internal auditors' refers to Institute
members and those who provide internal auditing services within the definition of internal auditing.

Applicability and enforcement

This Code of Ethics applies to both individuals and entities that provide internal auditing services. For Institute
members, breaches of the Code of Ethics will be evaluated and administered according to The Institute's
Disciplinary Procedures. The fact that a particular conduct is not mentioned in the Rules of Conduct does not
prevent it from being unacceptable or discreditable, and therefore, the member liable to disciplinary action.

The Code of Ethics

1. Integrity Principle
The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgement.

Rules of Conduct
Internal auditors:
1.1 Shall perform their work with honesty, diligence and responsibility.
1.2 Shall observe the law and make disclosures expected by the law and the profession.
1.3 Shall not knowingly be a party to any illegal activity, or engage in acts that are discreditable to the
profession of internal auditing or to the organisation.
1.4 Shall respect and contribute to the legitimate and ethical objectives of the organisation.

2. Objectivity Principle
Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and
communicating information about the activity or process being examined. Internal auditors make a balanced
assessment of all the relevant circumstances and are not unduly influenced by their own interests or by others in
forming judgements.

Rules of Conduct
Internal auditors:
2.1 Shall not participate in any activity or relationship that may impair or be presumed to impair their unbiased
assessment. This participation includes those activities or relationships that may be in conflict with the interests
of the organisation.
2.3 Shall not accept anything that may impair or be presumed to impair their professional judgement.
2.3 Shall disclose all material facts known to them that, if not disclosed, may distort the reporting of activities
under review.
3.Confidentiality Principle
Principle Internal auditors respect the value and ownership of information they receive and do not disclose
information without appropriate authority unless there is a legal or professional obligation to do so.

Rules of Conduct
Internal auditors:
3.1 Shall be prudent in the use and protection of information acquired in the course of their duties.
3.2 Shall not use information for any personal gain or in any manner that would be contrary to the law or
detrimental to the legitimate and ethical objectives of the organisation.

4. Competency Principle
Internal auditors apply the knowledge, skills and experience needed in the performance of internal auditing
services.

Rules of Conduct
Internal auditors:
4.1 Shall engage only in those services for which they have the necessary knowledge, skills and experience.
4.2 Shall perform internal auditing services in accordance with the International Standards for the Professional
Practice of Internal Auditing.
4.3 Shall continually improve their proficiency and the effectiveness and quality of their services.

About the Code of Ethics

The Code of Ethics is authoritative guidance for the internal audit profession from the Global Institute of
Internal Auditors. It is part of the International Professional Practices Framework. Members of the Chartered
Institute of Internal Auditors all agree to follow the Code of Ethics and the Code of Professional Conduct.

Definition of internal audit

"Internal auditing is an independent, objective 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."

International Standards
Chartered Institute of Internal Auditors

The International Standards are authoritative guidance for the internal audit profession from the Global Institute
of Internal Auditors. They are part of the International Professional Practices Framework.
The International Standards are principles-focused, mandatory requirements consisting of:
• Statements of basic requirements for the professional practice of internal auditing and for evaluating the
effectiveness of performance.
• Interpretations, which clarify terms or concepts within the statements.

Overview of the International Standards

The purpose, authority and responsibility of internal audit is defined in a charter that recognises the professional
standards and that is approved by the organisation's governing body and management.
Internal audit's organisational independence and internal auditors' objectivity are protected by direct reporting to
the governing body.
Internal auditors undertake work only when they have the knowledge, skills and other competencies necessary.
Professional qualifications and commitment to ongoing learning are essential.
The head of internal audit is responsible for creating an ongoing programme of activities to ensure the quality of
internal audit; to obtain periodic independent confirmation of its quality; and to strive to improve continuously.

Attribute standards
Chartered Institute of Internal Auditors

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 organisation,
including the nature of the chief audit executive's functional reporting relationship with the board; authorises
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 organisation must be defined in the internal audit charter. If
assurances are to be provided to parties outside the organisation, 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
recognised 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 organisational 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 organisational levels.

1110 Organisational Independence

The chief audit executive must report to a level within the organisation that allows the internal audit activity to
fulfil its responsibilities. The chief audit executive must confirm to the board, at least annually, the
organisational independence of the internal audit activity.
Interpretation:
Organisational 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 enquiries of management and the chief audit executive to determine whether there is
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 fulfil 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 organisational 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