The Standard states: The internal audit activity must be independent, and internal auditors must be objective in performing their work. In practice what processes should the Chief Internal Auditor (CIA) have in place to reasonably ensure and demonstrate that threats to the team’s independence are suitably managed and its work undertaken with suitable objectivity? The following are some ideas:
By following the above practical steps, the CIA should be well positioned to discharge and clearly demonstrate their responsibilities (and those of their team) have been undertaken with suitable independence and objectivity. Be aware of perceived rather than simply actual conflicts at all stages of the audit process; from strategy, to resourcing, performance and reporting. As a rule, conducting your work with openness and transparency will stand you in good stead; if in doubt ask and discuss both internally and with your peers. Core Evidence Demonstrating Compliance
The CIA should ensure that robust arrangements are in place to capture, assess and minimise any potential (or perceived) threats to the team’s independence and objectivity. Records should be maintained, updated at least annually and supported by declarations from team members. Specific consideration of any potential threats could be worked into the assignment planning documentation, however, typically the ability to demonstrate that processes are in place to monitor potential threats will be sufficient to demonstrate compliance.
Independence is the freedom from conditions that might 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 [must have] direct and unrestricted access to senior University personnel and the Board. (Source: The IIA) The SIAAB also specifies that internal audit must have neither any reporting responsibilities nor direct operational oversight of any program area nor may it report to any program area within the agency. 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. (Source: The IIA). In a Nutshell All internal auditors need to remain independent from University functions and decision-making in order to support their objective state of mind in their work. Internal audit functions are not to be assigned to any other duties of the University.
Audit independence refers to the ability of an audit team to perform an independent assessment without interference from management. It is achieved by having the right people on the audit team and by ensuring that they are free from any influence from management. Audit independence means that an auditor has no stake in the business being audited. Audit independence ensures that there is no conflict of interest; it also helps ensure that the auditor can be trusted because he/she will have nothing to gain or lose from the results of the audit. The Institute of internal auditors (IIA) defines objectivity as the freedom from conditions that threaten the ability of the internal audit activity to carry out internal audit responsibilities in an unbiased manner. Audit Objectivity:Audit objectivity refers to the impartiality of the auditor's judgment. This is achieved by having the appropriate skills and experience to make objective judgments about the situation being assessed. Audit objectivity refers to the fact that an auditor’s professional judgment is not influenced by personal interest or bias. Objectivity means that an auditor does not take sides in a dispute. Auditors are expected to remain impartial, and the audit is done based on facts. The Institute of internal auditors (IIA) defines objectivity as 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.
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