Integrity

Global Internal Audit Standards and the Foundation of Integrity

• Professional Governance Framework:

  • Internal auditing as a profession is governed by a mandatory set of behaviors that dictate the actions of both individual internal auditors and internal audit functions (often referred to as internal audit shops).
  • Historically, these behavioral expectations were categorized as the core behaviors of the Code of Ethics for internal auditing.
  • Under the current International Professional Practices Framework (IPPF), these requirements are integrated directly into the Global Internal Audit Standards as a series of defined actions and behaviors.

• Defining Integrity in Internal Auditing:

  • Integrity is established as the primary core behavior among all standard requirements.
  • General/Abstract Definition: Integrity represents the fundamental quality of a person or product that renders them inherently trustworthy and reliable.
  • Professional Definition: Integrity forms the primary basis of trust, providing the foundational certainty that allows audit stakeholders, leadership, and external parties to rely on an internal auditor's professional judgment.
  • Core Function: Integrity ensures that internal auditors conduct their work with diligence, absolute truthfulness, and full alignment with both legal frameworks and organizational ethical values.

• The Onus of Ethical Evaluation:

  • Legality versus Ethics: An action, practice, or directive is not automatically ethical simply because it does not violate a specific law.
  • The burden of responsibility rests entirely on the internal auditor to evaluate every situation using a dual standard: asking not only whether an action is legal, but also whether it is ethical.
  • Non-Engagement Rule: If a requested duty or observed practice is determined to be unethical, the internal auditor is obligated not to engage in or facilitate it.
  • Professional Advice on Ethical Standing: Securing a new job at a different organization is relatively easy, but removing the long-term stain and reputation damage caused by a breach of trust or lack of integrity is extraordinarily difficult.

Professional Community Dynamics and Reputation

• The Small Audit Community and Interconnectedness:

  • The audit community—spanning both internal audit and external audit sectors—is remarkably compact and tightly connected.
  • The social concept of "seven degrees of separation" (associated with actor Kevin Bacon) directly applies within the accounting and auditing fields.
  • Over the course of a professional career, audit practitioners consistently find that they know someone who knows a given peer, or that others within the field share mutual connections with them.

• Impact of Professional Reputation:

  • A reputation as a trustworthy, dependable, and reliable professional is the primary determinant of how far an individual's career will progress.
  • Internal auditors must never take any action that compromises or invites third parties to question their integrity in either a personal or professional setting.

Execution of Integrity in Audit Settings

• Core Behavioral Duties:

  • Honesty, Diligence, and Responsibility: Auditors must actively attend to their professional duties, perform all job responsibilities with trustworthiness, execute audit procedures with painstaking diligence, and uphold complete honesty.
  • Legal Compliance and Disclosure Obligations: Internal auditors must scrupulously obey all applicable laws. They are required to make all disclosures mandated by legal regulations as well as those expected by the internal audit profession, acting at all times as standard-bearers for the profession.

• Avoiding Discreditable Acts:

  • Internal auditors are strictly prohibited from engaging in illegal acts or conduct that brings disrepute upon their organization or the auditing profession.
  • Examples of severe discreditable and illegal activities include:
  • Being arrested for drug trafficking.
  • Engaging in online money laundering.
  • Operating a vehicle while intoxicated (drunk driving).
  • Directly participating in or assisting others with illegal endeavors.

• Reputational Linkage and Organizational Reflection:

  • Misconduct committed by an individual is directly attached by the public and media to their broader institution or profession.
  • Sports Analogy: When a college football player is arrested for misconduct, news reporting never presents the event in isolation (e.g., merely stating that "John Smith got arrested"). Instead, reports explicitly identify the institution, such as "John Smith, starting linebacker for Manure Stool, got arrested." This explicitly ties the individual's bad behavior to the integrity of the entire athletic program and university.
  • Corporate Media Examples: News outlets routinely connect legal or ethical infractions to an individual's employer or former employer, highlighting affiliations such as a "former employee of Birmingham Water Works" or "Southern Company."
  • Auditors must continuously maintain high conduct standards to prevent casting reputational discredit onto their employing organizations or the broader profession.

• Alignment with Organizational Objectives:

  • Internal auditors are expected to respect and actively contribute to the legitimate and ethical objectives of their organization.
  • Standard Limit: If an organizational objective is unethical, internal auditors are explicitly not bound or required by the Global Internal Audit Standards to facilitate or support it.