On March 1st, 2023, The Institute of Internal Auditors (IIA) released a draft of the newly titled Global Internal Audit Standards. The release is a big next step in the International Professional Practices Framework (IPPF) Evolution Project, an initiative started in 2020 which is aimed at promoting consistency in global internal audit practices and enhancing internal auditors’ ability to help organizations achieve their goals. The sweeping update changes many facets of the framework that governs how we approach internal auditing. In this article, we will give a high-level summary of the major changes, while keying in on two updates that represent a starting point in understanding how the changes affect our clients.
One of the most visible changes is to the name of the standards themselves, which have gone from the mouthful of International Standards for the Professional Practice of Internal Auditing to the simplified Global Internal Audit Standards, or GIAS for short.
The Standards are organized into a structure that assigns one or more Standards to each of the fifteen principles, which are divided into the following five domains:
- Domain I: Purpose of Internal Auditing
- Domain II: Ethics and Professionalism
- Domain III: Governing the Internal Audit Function
- Domain IV: Managing the Internal Audit Function
- Domain V: Performing Internal Audit Services
Many of the remaining changes are closely tied to how the Standards have been divided into the above domains and will be covered in future articles. Today, we will discuss the first two domains, which focus on the purpose of internal auditing along with ethics and professionalism. These changes represent an introspective approach to IA, showing who we are, what we can do for our clients, and by extension, the public sector.
Mission/Purpose of Internal Audit
The first domain of the new standards is called, The Purpose of Internal Auditing. This domain combines the mission of Internal Audit and the definition of Internal Auditing into a comprehensive yet simple purpose statement, which addresses how internal auditing helps organizations better serve the public interest.
Purpose Statement: Internal auditing enhances the organization’s success by providing the board and management with objective assurance and advice.
The statement goes on to detail how IA strengthens an organization’s value creation, risk management, decision making, reputation with their shareholders, and ability to serve the public interest. There is also an important description of the conditions in which IA is most effective – when it is performed by a qualified auditor following GIAS, who is independently positioned with direct accountability to the board and is free from bias and undue influence.
Ethics and Professionalism
The Ethics and Professionalism domain now includes the Code of Ethics, as well as standards addressing due professional care, professional skepticism, and minimum requirements for continuing professional development. This domain contains the first 5 out of 15 principles which comprise the five domains.
- Principle 1: Demonstrate Integrity
- Principle 2: Maintain Objectivity
- Principle 3: Demonstrate Competency
- Principle 4: Exercise Due Professional Care
- Principle 5: Maintain Confidentiality
Each of the principles has one or more individual Standards associated with it, and each of those has specific requirements which internal auditors must meet in order to be compliant with GIAS.
The new structure of the Standards offers us an opportunity to display accountability in how we conduct ourselves, and commitment to professional principles. Moving forward, we will cover governance of internal audit functions which will outline the major responsibilities of the board, and how the Chief Audit Executive can support an organization’s leadership in their goals and responsibilities.