Internal Audit Reminder: Opportunity to Comment on the New Professional Standards Ends April 30

Kyle Furtis, Managing Director Internal Audit and Financial Advisory Practice

Thanks, again, to everyone who tuned in to the live stream of our What’s on the Internal Audit Horizon webinar on March 31. For those of you who missed it, we had a packed agenda covering a wide variety of topics. I’ll hit the highlights, but you’re going to need to watch the archived version of the one-hour webinar to get more detailed information, including best practice summaries and our road map for implementing data analytics.

We spent a good deal of time talking about proposed changes to The IIA’s International Standards for the Professional Practice of Internal Auditing, comments for which are due this week, April 30. The changes, which were published for public comment on February 1, are focused on three areas:

  • Enhancing existing standards on communications and quality assurance
  • Creating new standards addressing objectivity in assurance and consulting roles, as well as addressing new roles internal audit functions are taking on, and
  • Aligning existing standards to a new set of core principles incorporated into the International Professional Practices Framework (IPPF) last year.

With the looming April 30 deadline for comments in mind, I thought I’d call the proposed new standards out for your attention, and expand a little bit about the changes, which speak to the future of the internal auditing profession.

  • Proposed Standard 1112 addresses the chief audit executive’s expanding role beyond traditional internal auditing into areas previously within the exclusive domain of the first and second lines of defense – areas such as the independent compliance or risk management oversight functions. Although there is nothing wrong with CAEs providing proactive compliance and risk management assurance in a consultative capacity, the new standard calls for safeguards to ensure that such responsibilities do not impair, or appear to impair, the organizational independence of the internal audit function or the individual objectivity of the CAE. Such safeguards might include periodic reviews of reporting lines and responsibilities, and developing alternative processes to assure that areas of potential conflict receive objective assurance.
  • Proposed Standard 1130.A3 states that the internal audit function and individuals involved in providing consultative services may continue to provide assurance regarding those activities in which they have provided consulting services, provided they can demonstrate that there has not been any impairment to their organizational independence or individual objectivity. The Standards Board deemed this clarification necessary because Standard 1130 did not previously address consultative activities.

Again, comments on the exposure draft are due in to The IIA by April 30. This is your opportunity to weigh in and ensure that the proposed changes to the Standards sufficiently support the demands of the profession, its practitioners, and your organization. The new standards are scheduled to be announced October 1, and become effective January 1. Protiviti recommends that you familiarize yourself with the proposed standards, evaluate the potential effects on your internal audit infrastructure and methodology, and start implementing them as soon as they become effective, so that you’ll be fully ready to apply them in practice by January 1.

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