[2] Internal auditors should follow the policies and procedures set by the organization and the CAE, as well as earlier. C operations in conjunction with the agreed-upon criteria. Internal auditor and landlord of multiple housing that publicly advertises for tenants in a local community 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. and mentorship, rotating internal C An error occurred trying to load this video. Confidential information acquired as a result of professional and business relationships should not be used for the personal advantage of the professional accountant or third parties. B regularly reviewing individual audit staff, bringing in guest C Competency Framework to A Q26 office indicated that the neighbor's division was going to be closed down in about six months. Despite their employment by the company they are auditing, internal auditors report to high levels of management or the Board of Directors to give them the ability to provide independent and objective reports on various operations within the organization. Test Bank such as data encryption, email distribution restrictions, and restriction of physical access to the information. D respect the value and ownership of information they receive and do not disclose information without A Observe the law and report the disclosures expected by the law and the profession. cabinets, and through information system controls, including password protection and encryption of data. The Institute of Internal Auditors International Standards for the Professional Practice of Internal Auditing, "Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. Fact Pattern: The chief audit executive (CAE) of a mid-sized internal audit activity was concerned that I would definitely recommend Study.com to my colleagues. Page 21 of 41, CMA, FMVA, CMSA, CBCA, BIDA, CRE | albashatariq@outlook.com A professional accountant should be straightforward and honest in all professional and business relationships. A professional accountant should act diligently and in accordance with applicable technical and professional standards when providing professional services. 2.1 Shall not participate in any activity or relationship that may impair or be presumed to impair their unbiased assessment. following? Continually improve their proficiency, effectiveness, and quality of services. Objectivity The companys internal audit charter states, If independence is impaired in fact or appearance, the details of the An auditor does not face many different types of ethical situations. Q20 Integrity, objectivity, confidentiality, and competency. [2] The CAE should cultivate a culture of integrity by [6] Internal auditors are to disclose any material facts about the activities under review. [3] Cost savings and recommendations were highlighted in the engagement communication. improve effectiveness during the last 3 years. Based on this experience, the internal auditor spent several hours one Saturday working as a Q1 These include employers, employees, investors, the business and financial community, clients, regulators and government. B Perform the work with honesty, diligence, and responsibility. But Auditor A was senior auditor for the external audit of Professional internal auditors should take into consideration the public interest and reasonable and informed public perception in deciding the actions to take, bearing in mind that the level and nature of the public interest varies between organisations depending on their role, size, systemic importance or public prominence. D However, due care is inherently required under the IMA statements on competence. The Code of Ethics prescribes defined actions. Q14 If the internal auditor is violating The IIAs Code of Ethics, the rule violated is most likely B Reflect only legal standards of conduct for individuals and the organization. 2. The internal auditor had a conflict of interest with the organization. Q3 C the engagement. For this reason, it is critical that auditors maintain a high level of standards in terms of audit ethics. [3] The CAE should periodically assess and confirm internal auditors need for access to areas and databanks [2] The CAE may require internal auditors to complete an acknowledgement form disclosing potential conflicts of [5] To save time, the CAE no longer required that a standard internal control questionnaire be completed for C Internal auditors apply the knowledge, skills and experience needed in the performance of internal auditing services. Q8 D After reviewing all of the ethical codes, create your own personal code of conduct by listing and describing at least four principles that you will aspire to in your career. All other trademarks and copyrights are the property of their respective owners. Sometimes this information can be so sensitive that it could be used to significantly harm the organization or individuals if it were to fall into the wrong hands. These policies typically cover data privacy, record retention, and physical and digital security of information. their own interests or by others in forming judgments. The IIA's Practice Advisories, Practice Guides, and Position Papers will guide operations as applicable. conclusions reached by the internal auditors, which is a validation that a balanced, objective review of all the That does not mean that the management accountant should not consider the public interest, but only that the public interest is secondary to the loyalty owed the employer. Ethics. Auditor D discussed the fraud with the external auditor when the external auditor the IAA as a whole, and verification of the securities without completing all of the steps. Both I and II. The assignment represented a good learning experience, but the area was clearly beyond the internal auditors Thus, the CAE adopted a very aggressive program to promote the internal audit activity within the organization. Out of appreciation of this work, and because it is the holiday season, the division manager presents the in- Go beyond the limitation of personal technical skills to advance the interest of the organization. D improvement program to promote contract. This participation includes those activities or relationships that may be in conflict with the interests of Seek counsel from an independent attorney to determine the personal consequences of potential actions. In performing governmental grant compliance audits, the auditor should 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. Provision of quality criteria for evaluating the internal audit functions performance experience. Not accept it if the gift is presumed to impair the internal auditor's judgment. They only refer to candidates for IIA professional certifications. writing that they have reviewed and understood policies and procedures of the IAA. B Q2 The internal audit activity violated the Standards by not providing adequate supervision. Paragraph #13 Integrity. B I. Violates The IIA Code of Ethics because serving on the board may be in conflict with the best interests of the A Integrity. The IIA Code of Ethics - Rules of Conduct - [3] Confidentiality - 3.1 & 3.2 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 organisation. Q2 Rules of Conduct that describe behavior norms expected of internal auditors. Demonstrating An internal auditor engages in the preparation of income tax forms during the tax season. An internal auditor who encounters an ethical dilemma not explicitly addressed by the IIAs Code of Ethics The integrity section holds the rules of conduct related to performing work with ''honesty, diligence, and responsibility,'' obeying the law, and following ethical goals. C acknowledge in writing their agreement to follow The IIAs Code acknowledge in writing any additional ethics-related policies specific to the IAA interest exist. 4.2 Shall perform internal auditing services in accordance with the International Standards for the Professional Practice of Internal Auditing. integrity? Independent auditors expect their report to be shared with the third parties, but they do not reveal client information. Integrity. Shall continually improve their proficiency and the effectiveness and quality of their services. Page 22 of 41, CMA, FMVA, CMSA, CBCA, BIDA, CRE | albashatariq@outlook.com Auditor C has not engaged in continuing professional education or other activities to Answers prescribe defined actions because the skills necessary for the engagement. Introduction . Section 2 8.00 Inform the employee that you will attempt to keep the source of the information confidential and will look into components: requiring internal auditors to acknowledge in writing that they have reviewed and understood policies and procedures of the IAA The IIAs Code of Ethics extends beyond the Definition of Internal Auditing to include two essential Confidentiality. The Code of Ethics B I and II. It describes the minimum requirements for conduct, and behavioral expectations rather than specific activities. Explanation #1 measures and the system of [4 - B] The CAE may include such Which of the following most likely constitutes a violation of The IIAs Code of Ethics? Respect and contribute to the legitimate and ethical objectives of the organization. Try refreshing the page, or contact customer support. Auditor C has not Activities that provide the organization with assurance and consulting services. charge internal auditor with a gift of moderate value. Internal auditors will be unable to contribute to the legitimate and ethical objectives of the organization. Plus, get practice tests, quizzes, and personalized coaching to help you Violation of Rules of Conduct Confidentiality. Report the override of control to the board. The rare exceptions to confidentiality occur when the internal auditor or accountant becomes aware of criminal activity. which core principle of The IIAs Code of Ethics? If the committee meets and approves the grants before such issuance, the internal auditor should requests by regulators and with education and development (CPE/CPD) hours they may need. assurance engagement that involves third parties, as they might need to release the results of an assurance Maintain an appropriate level of professional leadership and expertise by enhancing knowledge and skills. A Which of the following would violate The IIAs Code of Ethics core principle of competency? external consultants must follow. Test Bank Two. The Code of Ethics does not prescribe defined actions. Failing to comply with the law. If the supervisor appears to be involved, the issue could be presented to the next level of management. According to The IIAs Code of Ethics, which of the following principles is be used in gathering, evaluating, and The Institute of Internal Auditors (IIA) is a professional organization that helps to set the ethical standards for the internal auditing profession. C The AICPA is a member of the International Ethics Standards Board for Accountants (IESBA) and there is a continuing effort to keep the AICPA Code consistent with the International Code. B Judgment, interest, authority, and experience. The International Accounting Standards Board (IASB) was formed in 2001 to create and promote a common set of International Financial Reporting Standards (IFRS). 2.2 Shall not accept anything that may impair or be presumed to impair their professional judgment. In their reporting, internal auditors are required by The IIAs Code of Ethics to As previously mentioned, the IIA Code of Ethics is a set of principles and corresponding rules of conduct that guide the internal. All the grants, however, were approved and documented by the president. 4.3 Shall continually improve their proficiency and the effectiveness and quality of their services. 1.1 Explanation If the internal auditor encounters such a dilemma, the internal auditor should always When faced with unethical issues, the member should follow the established policies of his or her organization, including use of an anonymous reporting system if available. The IIA Code of Ethics; Internal auditors are expected to apply and uphold the following principles from The Institute of Internal Auditors. IIAs Code of Ethics or the organizations code of conduct. The IIA is a professional association focused exclusively on internal auditing in the United Kingdom and the Republic of Ireland and supporting, promoting and training the professionals who work in it. Only individuals. following? C Take no action because the internal auditor did not benefit from the transaction. placed in its objective assurance about governance, risk management, and control. Q10 Q4 [8] The CAE may demonstrate a culture supportive of competency and the continual improvement of proficiency, To implement Rules 1.2 and 1.3, internal auditors must become familiar with the laws and regulations relevant to Confidentiality. The integrity principle is the first principle listed in the IIA Code of Ethics and it states that internal auditors must ''perform their work with honesty, diligence, and responsibility.'' The internal auditor was not prudent in the use of information acquired in the course The officer promised to compensate for the questioned amounts by not claiming legitimate expenses in the C acknowledgement form disclosing Page 26 of 41, CMA, FMVA, CMSA, CBCA, BIDA, CRE | albashatariq@outlook.com Tax preparers also have a code of ethics. In engagement workpapers, internal auditors conducting an engagement may document The organization has downsized and has a very lean staff. A exhibits a higher standard of ethical behavior than does B. relationships that may be in conflict with the interests of the organization. providing training that demonstrates integrity other ethical principles in action 1. Q6 D following? 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 organisation. Study with Quizlet and memorize flashcards containing terms like The chief audit executive (CAE) has been appointed to a committee to evaluate the appointment of the external auditors. managers that no major personnel changes have occurred. requirements, and protections of Each section contains one or more principles that internal auditors must adhere to. Intended to guide the ethical conduct of internal auditors. If the matter remains unresolved, the professional accountant should consult with other appropriate persons within the firm or employing organization for help in obtaining resolution. The internal auditor purchased stock in the company after seeing a draft of the quarterly financial statements. [7] Internal auditors are required to establish a written understanding of the restrictions related to the Q18 D Shall respect and contribute to the legitimate and ethical objectives of the organization. The full text of the IIA Code of Ethics can be found below: . For instance, individual salaries and records of reprimands or personal problems discussed with supervisors and D 3. Core Principles - The Institute of Internal Auditors or The IIA D This code and the procedures are available to the public. Shall not participate in any activity or relationship that may impair or be presumed to impair their unbiased Auditors will learn many things that should be kept confidential. [7] The CAE may require internal Refrain from any action that might be detrimental to the organization. Q18 D Q4 D Page 12 of 41, CMA, FMVA, CMSA, CBCA, BIDA, CRE | albashatariq@outlook.com Q22 Auditors should make decisions based on facts and information and not on their personal preferences or The AICPA Code of Conduct, which is primarily for CPAs with a significant focus on independent accountants/auditors. 4.2. observations from the final engagement communication with a provision that the internal auditor could revisit C This participation includes those activities or C [8] Internal auditors may create and maintain plans for their professional development. auditors from major competitors were in the audience. A Q8 Q10 follow established procedures for disclosure, including contacting the correct authority in the organization for The following lists six actions the CAE took to promote a positive image within the organization: Three. A According to The IIAs Code of Ethics, which of the following principles is relevant to that internal auditors Which ethical code was more helpful? The IIA Code of Also, membership in professional organizations may help internal auditors stay current with relevant professional Code of Ethics - Internal Audit by the Institute of Internal Auditors Code of Ethics. organization. be disclosed, the parties that must authorize the disclosure, and the procedures to be followed. The rules and procedures for dealing with any allegation of infringement against the code are described in the Professional Complaints Procedures. D Internal auditors respect the value and ownership of information they receive and do not disclose information This has resulted in an international effort to create common standards. No. [2] The CAEs management of the internal audit activity supports its integrity, objectivity, confidentiality, and effective as when last assessed (or that there has been no change in the control effectiveness) would be The IIAs Code of Ethics requires internal auditors to perform their work with Page 6 of 41, CMA, FMVA, CMSA, CBCA, BIDA, CRE | albashatariq@outlook.com 1.2 Shall observe the law and make disclosures expected by the law and the profession. Today over 140 countries have adopted IFRS. Which of the following situations is a violation of The IIAs Code of Ethics? Has not violated The IIAs Code of Ethics or the Standards because confidentiality takes precedence over all other The organizations policies and procedures may require that If The IIA Code of Ethics is an important part of the internal audit profession and helps to ensure that internal auditors are conducting their work with the utmost integrity and professionalism. The IIA Code of Ethics - Rules of Conduct - [1] Integrity - 1.3 service providers. Example - Point #5 The code is designed to protect the confidential information that auditors have access to, instruct auditors to maintain the necessary skills and knowledge needed to perform their job, and set out standards for ethical behavior. The chair of the grant authorization committee, who is also a member of the board of directors, proposes that D Q3 Rules of Conduct that describe behavior norms expected of internal auditors. Both individuals and entities. Certain facts recorded in the internal auditor's working papers that helped to support the basic allegations made Besides, they were also aware of the unethical behaviour which occurred . and effectiveness, and to find areas for potential growth. Has violated the Standards because the internal auditor should inform the appropriate authorities in the Page 1 of 41, CMA, FMVA, CMSA, CBCA, BIDA, CRE | albashatariq@outlook.com The two basic types of safeguards are: Sections 100.16 through 100.21 of the International Code provides robust guidance on how to resolve an ethical conflict. C Q21 C Auditors typically have access to sensitive and confidential information as part of their work. measure, enforce, or guarantee. Section 11 19.00 Integrity Principle The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgement. A Responsibility. This can happen in many ways, such as the existence of a pre-existing relationship between the auditor and the client, or if a client has offered the auditor a bribe. Seek counsel from an independent attorney to determine the personal consequences of potential actions. Violated the Code of Ethics principle of objectivity. Paragraph #9 hide, or exaggerate findings. should make decisions based on facts and information and not on their personal preferences or feelings? than on business financing. Integrity. Q2 B negotiations. Neither I nor II. violation of the IIA Code of Ethics. C Which of the following statements regarding the acceptance of the gift is true? [6 - A] The CAE may discuss the The internal auditor relays this information to the friend. A D B [3] Internal auditors collect only the data required to perform the assigned engagement and use this information The competency principle is the fourth principle listed in the IIA Code of Ethics and it focuses on maintaining the necessary skills and knowledge to perform their job. A code of ethics is necessary and appropriate for the profession of internal auditing, founded as it is on the trust placed in its objective assurance about governance, risk management, and control. concern illegal activities. The Code of Ethics does not provide specific guidance. Internal auditors: 1.3. [3] Internal auditors should not be unduly influenced by others or subordinate their judgment on audit matters to The code of ethics covers such things as purchase agreements, relationships with vendors, and other issues. The use of the confidential information resulted in no personal gain to the internal auditor. Express standards of individual behavior for members of the organization. II and III. values, usually found in annual strategic plans, employee handbooks, and/or policy manuals. PDF CODE of ETHICS - The Institute of Internal Auditors Objectivity Integrity demonstrate the principle. According to the IIA Code of Ethics, the principle of Objectivity requires internal auditors to do which of the Assurance Services Types & Example | What are Assurance Services? IIA Code of Ethics | PDF | Internal Audit | Audit - Scribd Q13 C Subjectivity in presenting information, preparing reports, and making analyses. Page 4 of 41, CMA, FMVA, CMSA, CBCA, BIDA, CRE | albashatariq@outlook.com A punches out when not at work. B IMA offers an anonymous helpline that the member may call to request how key elements of the IMA Statement of Ethical Professional Practice could be applied to the ethical issue. should be reported, and the internal auditor should investigate further for fraud. continuing education for the next 12 months due to the staffs workload. Q2 C Standards D Principles that are relevant to the profession and practice of internal auditing. This information is only valuable if it is reliable. performance. in guest auditors, and/or hiring external service providers. C As previously mentioned, the IIA Code of Ethics is a set of principles and corresponding rules of conduct that guide the internal audit profession. A Q8 C Shall not accept anything that may impair or be presumed to impair their professional The best reason for establishing a code of conduct within an organization is that such codes Q5 Shall perform internal auditing services in accordance with the International Standards for Confidentiality. The CAE should Projects typically include: The Institute of Internal Auditors (IIA) is an international association of internal auditors. Therefore, by applying the Code, members are also applying the global Code of Ethics. All other audits in the U.S. follow audit standards issued by the Auditing Standards Board (ASB). Q1 C Section #1: The Code of Ethics Overview An auditor faces many different types of ethical situations. Introduction to the Code of Ethics International Professional Practices Framework (IPPF) | The IIA Internal auditors shall engage only in those services for which they have the necessary knowledge, skills, and D D Q4 unacceptable or discreditable, and therefore, the member, certification holder, or candidate can be liable for A first-year internal auditor was having difficulty completing assignments on time. The internal audit activity violated the Standards by not providing adequate supervision. The internal auditor directed his brother to sell company stock during the companys blackout period. flashcard sets. The CFO approved the I only. A [3] The CAE should inventory the skills and experience of individual auditors, align them with the competencies that division and has audited many electronics organizations during the past 2 years. The work product for an independent auditor will be relied upon by investors, creditors, regulators, economists, analysts, and government agencies; this requires independence. Comply with organizational policy. 4.1. the engagement records, in part by They should only use this information for the purpose it was intended for and should not share it with anyone outside of the organization. B B Describe behavior norms expected of internal auditors. [1] The CAE may create relevant policies and procedures, such as a policy about internal auditors receiving gifts, experiences. The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgement. consultants must follow. Internal auditor and part-time business insurance broker. A The most appropriate way for the CAE to deal with this problem is to Accepting a small gift of insignificant value from a customer of his/her organization. Honesty, diligence, and responsibility. Shall continually improve their proficiency and the effectiveness and quality of their Despite this lack of independence, internal accountants and auditors must still be objective and exhibit high integrity. C Auditor B has been assigned to perform an engagement at the warehousing function 6 months from now. D Q24 A How many of the allegations about the internal auditor represent violations of the IIA Code of Ethics? Inform The IIAs Board of Directors and take the personnel action required by organizational policy. Objectivity Two. IAA as a whole. To provide a framework within which accounting policies could be effectively developed and executed. D Standards. future. 6. C Which of the following statements is true about the Code of Ethics? All of the choices are correct. Q10 B Q4 A THE CODE IIA-P, being a Chapter of The Institute of Internal Auditors, Inc. (IIA), upholds the IIA's core ethical principles - integrity, objectivity, confidentiality and competency - embodied in its Code of Ethics, applied in the areas of Organizational Responsibility, Service to Members and Ethical Leadership. The IIA code of ethics is designed to establish standards for the professional conduct of internal auditors. The IIA Code of Ethics - Rules of Conduct - [1] Objectivity - 2.1 under the IIA Code of Ethics? Internal auditor and a well-known charitable organizations local in-house chairperson. Q3 D Continuing professional development requirements. Company B is in a very different industry from Company A. Answers Integrity is everything in the world of internal auditing. private lodge. Risk-based assurance.