The role of the internal audit activity in the ethical culture of an organization is to
This report looks at how boards and audit committees can help rebuild public trust by making the best use of internal audit as they develop their thinking around how to improve ethical conduct for the benefit of customers, employees, all other stakeholders and for business itself. Show Download the full report (pdf) Read the board briefing Overview • In financial services auditing culture is a key feature of the IIA Code2. But there is a similar need across many other sectors. • Internal audit can play an advisory role on processes and controls in cultural change programmes. But the ownership of such programmes must lie with the executive. • Internal audit’s role is to analyse to what extent processes (such as performance management and remuneration), actions (such as decision making) and tone at the top are in line with the values, ethics, risk appetite and policies of the organisation. They can therefore help boards judge whether measures put in place to change culture and thus behaviour are actually working. • Auditing culture and its indicators is complex. Culture is an amorphous concept. • Internal auditors need to understand their own organisation’s culture, including risk culture, before starting to audit the indicators. There are many models that look at the components of organisational culture. But it is dangerous to reduce work on culture and behaviour into one set of indicators based on a particular model. • There is no one-size-fits-all solution to auditing culture as organisations can be very different, even if they are producing the same or similar outputs. • Cultural change does not happen overnight, and providing assurance to boards on change programmes and their effects will be an increasingly important part of internal audit’s work. • It is important that audit committees engage with internal audit on culture from the start, so that policies and processes can be developed that build in the need for assurance. Content reviewed: 11 October 2019 Ethics impacts all professionals regardless of status, tenure, or profession. For internal auditors, ethics can become a very sensitive issue and pose a dilemma when attempting to execute their responsibilities and fiduciary duties. ❝No matter how well trained, every internal auditor must deal with challenges to their judgment and to their core ethical values. How they handle those pressures determines the value of the profession. ❞ The IIA CBOK Internal auditors are often put in positions where they must make difficult and uncomfortable inquiries. In my opinion, internal audit effectiveness shall be measured by its ability to deliver the “truth” or the “bad news” regardless of the fear of backslashes. According to the Institute for Global Ethics (IGE), five ethical values exist in any human culture, regardless of age, religious affiliation, gender, or nationality. Those values — which play a role in all dealings, transactions, relationships, and situations — comprise being:
It’s important to note that internal auditors must adhere to their own Code of Ethics, which is included in The IIA’s International Professional Practices Framework (IPPF). The Code of Ethics mandates that internal auditors behave and practice with:
Conformance with The IIA’s Code of Ethics is a must. Professional internal auditors' decisions shall always be aligned with the IPPF including the Code of Ethics. “An effective internal audit function can have a positive impact on corporate culture and ethics”. Culture is the DNA of an organization. Ethical culture makes all the difference; healthy culture starts with clarity of values. Boards, executives, and management need to review their measurement systems to ensure they are not running contrary to their desired values and must showcase that poor culture and organizational behavior are taken seriously. Ethical and healthy cultures enable broad thinking and appropriate risk-taking, without focusing myopically on the next quarter’s financial results or causing significant disruption to the organisation. It sounds simple enough, but it’s actually quite rare. The commitment to professional ethics is one of the cornerstones of the Internal Audit Profession. The commitment to professional ethics is one of the cornerstones of the Internal Audit Profession. Extensive research shows that internal auditors often face pressure to change or suppress various audit findings. How the internal auditor responds to those changes determines the value of the internal audit function within that organization. An effective internal audit function can have a positive impact on corporate culture and ethics. I welcome your thoughts. What is the role of internal audit activity?The internal audit activity helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.”
What are the importance of internal audit to the organization?The role of internal audit is to provide independent assurance that an organisation's risk management, governance and internal control processes are operating effectively.
What is the role of the internal auditor in an organization quizlet?Internal auditor acts as a catalyst for improving an organization's effectiveness and efficiency by providing insight and recommendation based on analyses and assessment of data and business processes.
What is the role of the internal audit function in an organization and how does this function relate to internal control?The primary role of internal-audit (IA) functions is to help decision makers protect organizational assets and reputations, as well as to support operational sustainability—functions that have come under increasing pressure over the past year.
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