Possible Changes Afoot to Internal Auditing Standards
The Institute of Internal Auditors (IIA) proposed changes to its standards for internal audit practitioners on Feb. 1 that are intended to help them meet the challenges and the evolving demands of today’s dynamic business environment.
The proposed changes to the International Standards for the Professional Practice of Internal Auditing are focused on three areas:
- 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 into the International Professional Practices Framework (IPPF) last year.
Some of the key changes and additions proposed to the standards include:
- Clarifies that the chief audit executive would be required to discuss interference that affects the scope, performance, or communication of internal audit activities with the board.
- Where the chief audit executive has or is expected to have roles and/or responsibilities that fall outside of internal auditing, safeguards would be put in place to limit impairments to independence or objectivity.
- Clarifies the need for internal audit to maintain objectivity regarding assurance following consulting. The proposal says, “Internal audit may provide assurance services where they had previously performed consulting services, provided the nature of the consulting did not impair objectivity and provided individual objectivity is managed when assigning resources to the engagement.”
- Clarifies what is expected to be disclosed by the chief audit executive to the board and senior management with respect to the quality assurance and improvement program. Such disclosures would include: scope and frequency of both the internal and external assessments, conclusions of assessors, corrective action plans, and the qualifications and independence of the assessor(s) or assessment team, including potential conflicts of interest.
“The demands on internal audit are evolving rapidly, and the IIA is working diligently to make sure the standards and IPPF reflect that evolution,” IIA President and CEO Richard Chambers said in a written statement. “We indicated last year that the changes to the IPPF would require related updates to the standards. The comment period on these proposed changes is the first step toward completing that update.”
The proposed changes will be open for review and public comment until April 30 through an online survey found here.
After the exposure period, comments will be reviewed and final changes approved in the third quarter of 2016. The modified standards will be announced on Oct. 1 and become effective Jan. 1, 2017, according to the IIA.
Source: Accounting Web
