These include employers, employees, investors, the business and financial community, clients, regulators and government. This reliance imposes a public interest responsibility on the internal audit profession. Professional internal auditors should take into consideration the public interest and reasonable and informed public perception in deciding the actions to take, bearing in mind that the level and nature of the public interest varies between organisations depending on their role, size, systemic importance or public prominence. Therefore, a professional internal auditor's responsibility is not exclusively to satisfy the needs of an individual employer or client. In acting in the public interest a professional internal auditor should observe and comply with the ethical requirements of this Code.
One the most important factors in using professional scepticism is the auditor’s experience. The auditor experience is essential in exercising professional judgement when assessing the evidence. The importance of professional scepticism is more prevalent today than ever before. Without professional scepticism, the auditor does not challenge nor remain alert to inconsistencies and circumstances that indicate actual or potential misstatements (Auditing and Assurance Standard Board, 2012). The unrealistic expectations of external users of financial statements to assume that an auditor remains totally impartial to client influence is a conclusion drawn from psychological research.
An auditor is required to be independent from the entity it has to audit. The independence requirements apply to auditors that are legally enforceable and are located within these legislations and standards of the corporations act. Maintaining independence has a number of aspects that the auditors must be mindful of throughout the clients/auditors relationship. There should be no conflict of interest situations while the audit process is being carried out. Auditor rotation is granted by the Australian Securities and Investments
Ineffective audit committee in the Enron and case and no audit committees in the Swaziland railway case and CTA case. According to the King 111 report and the Sarbanese Oxley Act 1) The board should ensure that the company has an effective and independent audit committee The (IOD: 2009) stressed that good corporate governance best practices dictate that a company should have an audit committee. Thus, in line with this principle, the board should approve the terms of reference of the audit committee. 2) The audit committee members should be suitably skilled and experienced non-executive directors Furthermore, the (IOD: 2009) contends that all members of the audit committee should be independent non-executive directors and there should be at least three members. The audit committee should collectively have sufficient financial knowledge of financial risks, financial sustainability reporting and internal controls.
Therefore, an auditor is not exclusively to satisfy the needs of an individual client. An auditor shall comply with the ethical requirement by the by-laws. However, auditor often faces ethical dilemma and ethical conflict during their work. An auditor is required to resolve a conflict in complying with the fundamental principles through the formal or informal conflict resolution process (By-Law s. 100.15). When initiating either a formal or informal conflict resolution process, several factor such as relevant facts, ethical issue involved, fundamental principles related to the matter in question, established internal procedures and alternative courses of action has to be considers to determine the appropriate course of action.
Institute of Internal Auditing Standards along with characteristics of the internal audit team Compliance with standards Compliance with Institute of Internal Auditing Standards has great influence on the effectiveness of internal auditing, therefore when complied with these standards the effectiveness of internal audit is expected to increase (Little, et al., N/A). All internal auditors are accountable for complying with the standards related to individual objectivity, proficiency, and due professional care. The Chief audit executives are accountable for the internal audit activity’s overall compliance with the standards (The Institute of Internal Auditors (IIA), 2017). Compliance with standards and an effective internal audit activity ensures
This type of understanding can not come from monetary analysis alone. Efficient interaction in between the technologist and the Committee members. The IT Audit Committee does not need additional board members. Existing board members can be designated the duty, and use consultants to assist them comprehend the problems adequately to provide support to the technology leader. A review of existing IT Audit Committee Charters shows the following typical qualities: 1.
2 The objectivity principle rule of conduct 2.1 violated that is “internal auditor 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” (Kurt, pp.2-7, 2-8). For example, it is disregarded by Gail Wu because of her incapacity to remain impartial from her past position in the finance department. It demonstrates the irreconcilable circumstance of the
Its functions include, amongst other things, monitoring internal control”. Sarens and DeBeelde (2006) states internal audit as a function that is needed by senior management to ‘compensate for the loss of control the management experiences as the result of increasing complexity in an organization’. The Professional Practices Framework in the Institute of Internal Auditors (IIA)
The organization has to classify the quality implementations through proper audits. The correct kind of audits will guarantee that suitable benefits can be reached by the parties in the long haul. Choosing the accurate method to the audits persists very significant and there are many things that need to be taken seriously when the audits are executed. Moreover, there are two types of audits: External audits and internal audits. Each one of them has a rubric including the current quality standards that must be followed to reach the excellence level.