Study Notes on Internal Auditing Principles

Updates in Internal Auditing Principles

Course Information

  • Course Title: IAPrElec 01 - Updates in Internal Auditing Principles

  • Semester: 2nd Semester, Academic Year 2025 - 2026

  • Class Schedule: Tuesday, 1:00 p.m. - 4:00 p.m.

  • Instructor: Lyka V. Lagunsin

Classroom Rules

  1. Patience: Maintain patience in all class activities.

  2. No Cheating: Academic integrity is paramount.

  3. Discipline: Adhere to classroom decorum and standards.

  4. Strictly Follow Instructions: Compliance with instructor’s directions is mandatory.

Grading System

  • Attendance: 5%

  • Quiz: 20%

  • Pre-test: 20%

  • Post-test: 33%

  • Term Exam: 22%

  • Total: 100%

Prelim Exam Format

  • Type: Modified True or False, Essay Writing.

International Internal Audit Standards Board (IASB)

  • Definition: A global group of internal auditors dedicated to enhancing professional practices in internal auditing through established standards.

  • Purpose: Ensuring standards elevate internal auditing practices to benefit public interest.

Global Internal Audit Standards (GIAS) - 2024

  • Functions: Guides worldwide professional practice in internal auditing; serves as evaluation basis for audit quality.

  • Framework: Provides structure for evaluating and improving internal audit procedures.

Internal Professional Practices Framework (IPPF)

  • Definition: Authoritative body of knowledge organized by the Institute of Internal Auditors for internal audit practices.

  • **Domains: **

    • D1: Purpose of Internal Auditing

    • D2: Ethics and Professionalism

    • D3: Governing the Internal Audit Function

    • D4: Managing the Internal Audit Function

    • D5: Performing Internal Audit Services

Institute of Internal Auditors (IIA)

  • Support: Empowers internal auditors with resources for professional development and risk mitigation.

  • Community Value: Enhances assurance, adds value, and increases organizational impact.

Acronym Memorization

  • The instructor emphasizes the importance of memorizing acronyms used within the field.

Course Contents

  • Acknowledgements

  • About the International Professional Practices Framework

  • Fundamentals of the Global Internal Audit Standards

  • Glossary

  • 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

  • Applying the Global Internal Audit Standards in the Public Sector

Acknowledgements

  • A tribute to stakeholders contributing guidance in developing the Global Internal Audit Standards. This includes the IASB and Oversight Council for their roles in the standard-setting process addressing public interest.

About the International Professional Practices Framework (IPPF)

  • Framework Definition: A structural blueprint for consistent development and application of internal audit standards globally.

  • Components: IPPF includes Global Internal Audit Standards, Topical Requirements, and Global Guidance.

  • Objective: To ensure high-quality internal auditing across diverse organizational environments.

Global Internal Audit Standards

  • Set of standards directing professional practice in internal auditing.

  • Constitutes 15 guiding principles enabling effective internal audit fulfillment.

  • Each principle supported by requirements, consideration for implementation, and conformity evidence.

Topical Requirements

  • Enhance the performance consistency of internal audits concerning specific areas.

Global Guidance

  • Provides nonmandatory information to support internal audit services performance.

Global Practice Guides

  • Offer detailed methodologies on assurance and advisory services, engagement planning, financial services, fraud risks, internal audit function management, public sector, and sustainability.

Global Technology Audit Guides (GTAG)

  • Equip auditors to address IT-related risks and controls.

Fundamentals of the Global Internal Audit Standards

  • Purpose: Guidance for internal auditing promoting high-quality execution.

  • Core Function: Internal auditing strengthens governance, risk management, and assures compliance.

Internal Auditing and the Public Interest

  • Defining public interest in terms of social and economic implications on society and organizations.

  • Internal auditing contributes significantly to public trust through assurance on efficiency, control reliability, and ethical culture fostering.

Applicability of Standards

  • These standards are relevant for all individuals performing internal audit services with varying organizational structures.

Domains of Standards

  1. Domain I: Purpose of Internal Auditing

  2. Domain II: Ethics and Professionalism

  3. Domain III: Governing the Internal Audit Function

  4. Domain IV: Managing the Internal Audit Function

  5. Domain V: Performing Internal Audit Services

Principles and Standards in Domains

  • Principles: Broad guidelines related to requirements.

  • Standards: Include mandatory practices, implementation considerations, and example evidence of adherence.

  • Definitions include key terminology for proper understanding and implementation.

Ethics and Professionalism in Internal Auditing

  • Importance of Ethics: Sets a foundation for trust and reliability in auditing practices.

  • Principle 1 - Demonstrating Integrity: Commitment to moral and ethical standards, encouraging truthfulness and professional courage.

  • The significance of transparency in communications and the importance of internal auditors' support connected to ethics.

Principle 2 - Objectivity

  • Maintaining impartiality in audit tasks, avoiding influences from conflicting interests.

  • Stressed that internal auditors must acknowledge and mitigate any potential impairments to objectivity.

Principle 3 - Competency

  • Requirement for internal auditors to maintain necessary knowledge and skills to effectively perform their roles.

  • Continuous professional development is emphasized for enhancing quality in audit services.

Principle 4 - Due Professional Care

  • Internal auditors are required to exercise discernment, diligence, and skepticism in audit planning and performance.

  • Auditors should conduct evaluations grounded in established practices for optimal outcomes.

Key Standards within Ethics and Professionalism

  • Standard 1.1 - Honesty and Professional Courage: Expectations for truthful communication and ethical conduct.

  • Standard 1.2 - Organization's Ethical Expectations: Encouraging culture aligned with ethical principles.

  • Standard 1.3 - Legal and Ethical Behavior: Internal auditors must abjure from illegal or discreditable activities.

Conclusion

This extensive outline of Updates in Internal Auditing Principles serves as a comprehensive guide for understanding the evolved standards and ethical conduct expected from the internal audit profession. Internal auditors equipped with these principles and standards will better navigate the complexities of their roles and responsibilities, emphasizing the importance of ethics, professionalism, and quality assurance in their organizations.