IIA POSITION PAPER
WHY CONFORMANCE MATTERS
Meeting Internal Audit Standards Key to Providing True Assurance
Introduction
Internal auditing is conducted in diverse legal and cultural environments for
organizations that vary in purpose, size, complexity, and structure, and by persons KEY TAKEAWAYS
within or outside the organization. Yet, no matter the environment, internal auditing
is a critical component of effective governance and organizational success. Internal audit should operate to
the highest level of ethical and
To best serve the organization and inspire stakeholder confidence, internal audit
professional competencies to
must operate at the highest level of ethical and professional competencies to
ensure consistent and accurate
ensure consistent and accurate delivery of risk-based and objective assurance,
assurance delivery.
advice and insight. Internal audit is most effective when its resource level,
competence, and structure are aligned with organizational strategy, and when it
follows the International Professional Practices Framework (IPPF) promulgated by Every professional internal
The Institute of Internal Auditors (IIA)1. auditor and internal audit activity
should follow and conform to the
The Institute of Internal Auditors Perspective IIA’s International Professional
Practices Framework (IPPF).
While differences may affect the practice of internal auditing in each environment,
The IIA’s IPPF has been developed to help internal auditors achieve the highest
level of competence and service. The IPPF comprises mandatory guidance that Internal audit should operate
includes: under a charter that adopts the
IPPF, and stakeholders should
Core Principles for the Professional Practice of Internal Auditing expect and accept nothing less.
Definition of Internal Auditing
Code of Ethics Stakeholders should require the
internal audit activity maintain a
International Standards for the Professional Practice of Internal Auditing
Quality Assurance and
Improvement Program (QAIP)
These are complemented by recommended guidance approved through a
and demand regular external
rigorous, formalized process that provides practitioners direction on Standards
quality-assurance reviews.
implementation and supplemental support.
Ultimately, internal audit delivers true value and earns stakeholder trust when it
contributes to organizational success, positive change, and innovation by
delivering assurance, insight, and advice.
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Conformance to the IPPF is essential in meeting the responsibilities of internal
auditors and the internal audit activity (IAA). It provides a measure of confidence
that the IAA is operating to a strict code of ethics, defined professional standards, FIVE QUESTIONS
and that its staff is trained to specified standards of education and continued
professional development.
Stakeholders must understand
The purpose of IIA Standards is to: the state of internal audit within
the organization and demand the
highest professional and ethical
Guide adherence with the mandatory elements of the International
performance.
Professional Practices Framework.
Provide a framework for performing and promoting a broad range of value- Here are five key questions they
added internal auditing services. should be asking:
Foster improved organizational processes and operations.
1.
Delineate basic principles that represent the practice of internal auditing Does the organization have
Establish the basis for the evaluation of internal audit performance.
internal audit and audit
committee charters that adopt
the IPPF?
The internal audit activity must operate under a charter2 that adopts the IPPF, and
stakeholders should expect and accept nothing less. 2.
Does the internal audit activity
A commitment to the continual review and improvement of the IAA is a vital aspect
follow and conform to the IPPF?
of earning and maintaining credibility and trust among its stakeholders. The
Standards require heads of audit to create Quality Assurance and Improvement 3.
Programs. Additionally, the IPPF contains an obligation (Attribute Standard 1312: Do internal audit staff members
External Assessment) for an external Quality Assurance Review every five years. hold relevant professional
certifications, such as The IIA’s
These external quality reviews validate the trust placed in internal audit by
Certified Internal Auditor (CIA)?
stakeholders by affirming that the IAA is operating in conformance to the
Standards. IAAs that comply with the IPPF and the Quality Assurance Review 4.
obligation are allowed to be recognized as “Conforms with the International Does the internal audit activity
Standards for the Professional Practice of Internal Auditing.” have a Quality Assurance and
Improvement Program (QAIP)
The board, senior management, and other governing bodies should require their in place?
internal audit functions to achieve this recognition.
5.
When the recognition is attained and maintained, stakeholders know they are being Does the internal audit activity
supported by functions that are operating to an international standard and can be undergo regular external
confident in the work performed and associated assurance and advice provided. assessment to demonstrate
conformance to the IPPF?
Who Must Conform and Why
Every professional internal auditor and every IAA must follow the mandatory
components of the IPPF. As a set of principles-based, internationally applicable
requirements for the practice and evaluation of internal auditing services, the
Standards are fundamental to successful internal auditing.
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Conformance is mandatory for:
IIA members.
Conformance to the IPPF
Certified Internal Auditors (CIAs).
strengthens the delivery of
Practitioners operating in countries that require IIA Standards compliance. internal audit services, which
Practitioners who fall outside these groups are not obligated to follow the
in turn helps the organization
Standards, but stakeholders should demand conformance as assurance of the improve governance, manage
IAA’s demonstrated level of competency. risks, and implement
controls to more effectively
Who Benefits from Conformance
achieve its goals. Those who
By definition and design, conformance to the IPPF strengthens the delivery of benefit include internal
internal audit services, which in turn helps the organization improve governance,
auditors, audit committees,
manage risks, and implement controls to more effectively achieve its goals. Those
who benefit include, internal auditors, audit committees, management, the board, management, the board,
shareholders, and regulators. shareholders, and regulators.
The IPPF provides a credible and current framework for these stakeholders to
understand internal audit’s role in effective governance, risk management and
control, and outlines the expectations they should have of their IAA. Conformance increases professionalism, drives and
encourages continued development of the profession, and nurtures conditions under which internal audit can thrive and more
effectively enhance and protect organizational value.
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IIA Global Advocacy Platform
2
IG 1000
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About Position Papers
The Institute of Internal Auditors (IIA) promulgates Position Papers on key issues of interest to stakeholders and practitioners with the aim of advocating for sound
governance and educating those involved in it. The positions outlined offer insights into various aspects of the governance process and internal audit’s vital role in
improving governance at all levels and adding value to the organization. Position Papers are developed and reviewed through a rigorous process that solicits input
and critique from practicing internal audit professionals and other IIA volunteers who serve on The IIA’s Global Advocacy Committee, IIA Standards Board, and The
IIA’s Professional Responsibility and Ethics Committee.
About The 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. For more information, visit www.theiia.org.
Disclaimer
The IIA publishes this document for informational and educational purposes. This material is not intended to provide definitive answers to specific individual
circumstances and as such is only intended to be used as a guide. The IIA recommends that you always seek independent expert advice relating directly to any
specific situation. The IIA accepts no responsibility for anyone placing sole reliance on this material.
Copyright
Copyright © 2018 by The Institute of Internal Auditors, Inc. All rights reserved.
May 2018
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