Building a Better Auditor: Setting Internal Audit Standards in the Public Interest
Blogs Dr. Lily Bi, CIA, CRMA, CISA Nov 07, 2022
To guide a professional's performance and the quality of professional services delivered, standards are needed. For internal auditing, those standards are provided in The IIA's globally recognized International Professional Practices Framework, which includes the International Standards for the Professional Practice of Internal Auditing. This core set of requirements is designed to ensure the profession achieves its mission: to enhance and protect organizational value by providing risk-based and objective assurance, advice, and insight.
The IIA is undertaking an unprecedented IPPF Evolution project to review and revamp the IPPF and the Standards. Given the importance of the Standards to governments, businesses, and society, The IIA is committed to setting standards that serve the public interest. Organizations are now looking beyond just financial returns to nonfinancial issues that matter to society, such as the long-term health and sustainability of society and the planet. Organizations are also witnessing the creation of global regulations for reporting these issues to stakeholders.
At The IIA, the responsibility to oversee standards and ensure they are set in the public interest falls to the IPPF Oversight Council. This independent oversight group evaluates and advises on The IIA's standard-setting process to promote inclusiveness and transparency, which ultimately serves the public interest. The Oversight Council is comprised of representatives from the International Federation of Accountants, International Organization of Supreme Audit Institutions, National Association of Corporate Directors, Organisation for Economic Co-operation and Development, and the World Bank.
In March 2022, the Oversight Council established the Framework for Setting Internal Audit Standards in the Public Interest which will enable The IIA's International Internal Audit Standards Board to set high-quality standards, worthy of extensive global adoption and implementation. The Framework provides a conceptual foundation with criteria for a structure and approach that supports stakeholder responsiveness and public interest in international standard setting.
The Framework outlines that the public interest is served when:
- The standard-setting process demonstrates responsiveness to the internal audit profession and its direct and indirect stakeholders through continuous engagement and transparency.
- Standard setting has a permanent structure (i.e., International Internal Audit Standards Board) and a rigorous process that is responsive to the changes in the profession, business, and society. This enhances trust in the Standards and internal audit's assurance and advisory services.
- The Standards Board carefully identifies the varying perspectives and needs of stakeholders in relation to each standard and considers input from identified stakeholders throughout the development process.
As part of the IPPF Evolution project, The IIA and the Standards Board are using the Framework in setting the new Standards.
Ahead of a public comment draft to be released in 2023, The IIA has been consulting with stakeholders and internal audit professionals around the world. Day-long roundtables in Washington, D.C., and Brussels, Belgium, resulted in insights from more than 40 external stakeholders, such as the International Monetary Fund, World Bank, European Commission, the U.S. Public Company Accounting Oversight Board, various regulators, the Global Network of Director Institutes, and central banks. Two global webinars, open to the public, were attended by more than 5,000 people. Five regional workshops in June and the 2022 Global Assembly in September with institute leaders from 91 countries produced numerous comments from IIA members. The IIA's Principal Partners, firms that provide internal audit services, offered feedback on how planned changes would affect their practices and their clients. Numerous one-on-one meetings with key stakeholders have produced helpful advice. The feedback has been conveyed to the technical team writing the new Standards, with much more to come following the public comment period.
In the end, the stakeholder engagement process will boost the quality, relevance, and impact of the new Standards, and ultimately serve the public interest.