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Professionalism

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The Professional Practices Framework: Ethics and Standards of Practice. Kenneth G. Dixon ... Professional Practices Framework (PPF) Code of Ethics ... – PowerPoint PPT presentation

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Title: Professionalism


1
ACG 4671 Internal Auditing
2
  • CHAPTER 2
  • The Professional Practices Framework Ethics and
    Standards of Practice

3
Overview
  • Importance
  • Ethics
  • Professional Practice Standards

4
Importance
  • To be a profession, a field of practice must have
    standards to govern practices, procedures, and
    ethics
  • Professional Practices Framework (PPF)
  • Code of Ethics
  • International Standards for the Professional
    Practice of Internal Auditing
  • Practice Advisories
  • Other Guidance

5
IIA Code of Ethics
  • IIA Code of Ethics contains 4 Principles and 12
    Rules of Conduct
  • Principle Rules of Conduct
  • Integrity (4) Section 1.1-1.4
  • Objectivity (3) Section 2.1-2.3
  • Confidentiality (2) Section 3.1-3.2
  • Competency (3) Section 4.1-4.3
  • Applies to all internal auditors and internal
    audit functions

6
Integrity
  • 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 organization.
  • 1.4. Shall respect and contribute to the
    legitimate and ethical objectives of the
    organization.

7
Objectivity
  • 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 organization.
  • 2.2 Shall not accept anything that may impair or
    be presumed to impair their professional
    judgment.
  • 2.3 Shall disclose all material facts known to
    them that, if not disclosed, may distort the
    reporting of activities under review.

8
Confidentiality
  • 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 organization.

9
Competency
  • 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.

10
Internal Auditing Standards Board
  • The IIA develops and issues standards that define
    the basic practice of internal auditing.
  • The board lists these rules in the International
    Standards for the Professional Practice of
    Internal Auditing (Red Book).

11
Objectives of the Red Book
  • Outline basic principles that represent the
    practice of internal auditing.
  • Provide a framework for performing and promoting
    a broad range of value-added internal audit
    activities
  • Establish the basis for the measurement of
    internal audit performance
  • Foster improved organizational processes and
    operations

12
Authority of the Red Book
  • Does not have same legal authority as other
    standards, but represents the only recognized set
    of performance standards for internal auditors
  • Applies to all internal auditors and internal
    audit functions
  • Used by courts in cases involving the adequacy of
    the performance of internal audit activities

13
Standard Types
  • Code of Ethics
  • Attribute Standards Performance Standards
  • Consulting Implementation Assurance
    Implementation
  • Standards Standards
  • Practice Advisories
  • Other Guidance

14
Standards Classification Schemes
  • 1000 Level (Attribute)
  • Addresses the characteristics of organizations
    and parties performing internal audit activities
  • 2000 Level (Performance)
  • Describes the nature of internal audit activities
    and provides quality criteria against which the
    performance of these services can be evaluated.

15
Attribute Standards (1000 series)
  • 1000 Purpose, Authority, and Responsibility
  • 1100 Independence and Objectivity
  • 1200 Proficiency and Due Professional Care
  • 1300 Quality Assurance and Improvement program

16
Performance Standards (2000 series)
  • 2000 Managing the Internal Audit Activity
  • 2100 Nature of Work
  • 2200 Engagement Planning
  • 2300 Performing the Engagement
  • 2400 Communicating the Results
  • 2500 Monitoring Progress
  • 2600 Resolution of Managements Acceptance of
    Risk

17
Using Red Book Coding
  • 1130.C1
  • Attribute Independence Impairments to
    Consulting First
  • and Objectivity Independence
    Consulting
  • or Objectivity Standard
  • Internal auditors may provide consulting services
    relating to operations for which they had
    previous responsibilities

18
Practice Advisories and Other Guidance
  • Practice Advisories
  • Provide detailed interpretations of Standards
  • Are not mandatory
  • Other Guidance
  • Text books
  • Research
  • Corporate or industry guidelines
  • Other Standards
  • GAO
  • ISACA
  • INTOSAI
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