What are the 2 essential components of IIAs code of ethics explain each briefly?

CIA P1 - Foundations of Internal Auditing - The IIA Code of Ethics from Tariq Al-Basha

Members of IIA Singapore are required to declare that they abide by IIA Global’s Code of Ethics and IIA Singapore’s By-Laws. Disciplinary procedures will be enforced if members fall short of the Code.  

PRINCIPLES

Internal auditors are expected to apply and uphold the following principles:

• Integrity - The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgment.

• Objectivity - Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors make a balanced assessment of all the relevant circumstances and are not unduly influenced by their own interests or by others in forming judgments.

• Confidentiality - Internal auditors respect the value and ownership of information they receive and do not disclose information without appropriate authority unless there is a legal or professional obligation to do so.

• Competency - Internal auditors apply the knowledge, skills, and experience needed in the performance of internal audit services.

RULES OF CONDUCT

1.1. Shall perform their work with honesty, diligence, and responsibility.

1.2. Shall observe the law and make disclosures expected by the law and the profession.

1.3. Shall not knowingly be a party to any illegal activity, or engage in acts that are discreditable to the profession of internal auditing or to the organization.

1.4. Shall respect and contribute to the legitimate and ethical objectives of the organization.

2.1. 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.

2.2. Shall not accept anything that may impair or be presumed to impair their professional judgment.

2.3. Shall disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review.

3.1. Shall be prudent in the use and protection of information acquired in the course of their duties.

3.2. Shall not use information for any personal gain or in any manner that would be contrary to the law or detrimental to the legitimate and ethical objectives of the organization.

4.1. Shall engage only in those services for which they have the necessary knowledge, skills, and experience.

4.2. Shall perform internal audit services in accordance with the International Standards for the Professional Practice of Internal Auditing (Standards).

4.3. Shall continually improve their proficiency and the effectiveness and quality of their services.

ETHICS COMPLAINT PROCESSES AND FORM

Process for Disposition of Ethical Violation
Complaint of Alleged Violation of The IIA Code of Ethics Form

In an effort to strengthen corporate governance processes and practices, IIA Singapore (IIAS) has adopted a Whistle Blowing Policy to provide a means through which IIAS members, employees or members of the public could, in good faith, report any activity that infringes on the IIAS' code of ethics, By-Laws or violates the law so that IIAS may take the relevant action.

IIA Code of ethics has a similar objective to other codes of ethics. Its main objective is to promote the ethical activities that perform by organizations or individuals which provide internal audit services.

The four typical common Internal Auditor codes of Ethics provided by IIA are Integrity, Objectivity, Confidentiality, and Competency.

This Code of Ethics should be followed by a qualified Internal Auditor who got CIA and related qualifications which are governed by IIA.

However, if you are not a member of IIA, but you are working in the internal audit roles of an organization, you are recommended to follow this ethic.

What is the code of ethics?

The internal Auditor code of ethics is the framework or guidance that sets out the minimum requirement for the internal audit profession to follow in order to maintain and promote the professional activities as we as adding value to the organization that internal audit services are being offered.

Internal code of ethics issued by IIA and applicable to be followed by individuals or organizations that offer internal audit services.

Why is the code of ethics importance?

The importance of the internal audit code of ethics is not just to make sure that internal audit professionals conduct ethical behavior, but these codes also help to make sure that the services being offered to the organization are really added value to the success of those organizations.

This code of ethics tries to make sure that internal auditor stays independent so that the judgment made by them might be biased to their personal benefit.

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And the internal audit activity will not only do not add value to the organization but also costs them a lot.

Intern auditor requires to keep confidential information that they access. This is very important to make sure that the organization’s internal information is not leaked to the public, competitors, and other concerning parties.

If the audit does not follow this ethical requirement, the trust of the auditor from other parties like clients or the public will be reduced and subsequently affect the body as a whole.

From the organization’s point of view, the organization will face impairment as the result of the leaking of that information.

In short, the code of ethics is very important as they try to make sure that the internal audit activities provide objective assurance, trust services, and more importantly, adding value to the organizations.

Chief of Internal Auditor should make sure that Internal Audit Charter is included in four of these Code of Ethics.

Here the detail of these four Code of Ethics of Internal Audit:

1) Confidentiality:

An internal audit is just like an external audit. It has the chance to access any kind of sensitive information about the company. Therefore, Internal Audit is not allowing to spread of that information to the third party without consensus from the owner.

However, in some situations, the confidentially followed by the internal auditor is against the public interest. In that situation, the internal auditor is required to get a consultant from a professional lawyer.

Internal Audit is required to follow this ethic at any time. Breach of this ethic might be discipline in many ways. First, it is from the International Body like IIA.

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Second, from the firm or company that that personnel working with. Second, it is enforced by the law of those countries.

2) Integrity:

Internal Auditors should perform their professional activities in accordance with applicable law and regulation. The professional activities should be avoided from any conflict of interest to personal benefit.

During its work, the internal auditor might be requested to perform or not to perform certain activities not comply with its professional work.

Most of those requests were reworded in terms of personnel benefits. If such a request happens, an internal audit should reject the principle of integrity.

3) Objectivity:

The internal audit work to add value to the company and shareholders. It should avoid any activities that are biased and impair both shareholders and the company. It also should avoid the activities that impair internal audit professionals.

Objectivity is very important and the quality of audit works is highly dependent on this point. If the audit works are bias or subjective, then the audit option or conclusion does not represent the real things that happen to the objective being review.

4) Competency:

Competency basically refers to skill, and knowledge that auditor requires to have to make sure they compete with their job or services. Those skills and knowledge include accounting and audit techniques.

As internal auditor requires to review operation and compliance with applicable law, they are required to have knowledge in those areas.

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