International Professional Practices Framework/GUIDE (A.K.A.

RED BOOK)
 Only globally recognized guidance for the internal audit profession
 contains what are considered the essential elements for the delivery of internal
audit services.
 Conceptual framework that organizes authoritative guidance promulgated by The IIA
 Mandatory Guidance- MUST FOLLOW
 Recommended Guidance

Mission of Internal Audit (E,P,RB,OA,A,I)-(A,D)

 To enhance and protect organizational value by providing risk-based and objective
assurance, advice, and insight."
 Enhance and protect organizational value - internal audit activities must be directed
at increasing the organization's value or at protecting it
 Risk-based and objective assurance, advice, and insight-
o Assurance
o Advice – consulting
o Insight - the way we develop a clear and in-depth understanding of a particular
subject.
 Articulates what internal audit aspires to accomplish within an organization.
 demonstrates how practitioners should leverage the entire framework.

MANDATORY GUIDANCE RECOMMENDED GUIDANCE

-Developed following an established due
diligence process, which includes a
period of public exposure for stakeholder
input
-Conformance with the principles set forth
in mandatory guidance is required and
essential for the professional practice of
internal auditing
MANDATORY ELEMENTS
 Core Principles for the Professional
Practice of Internal Auditing
 Definition of Internal Auditing
 Code of Ethics
 International Standards for the
Professional Practice of Internal
Auditing (Standards)
 Endorsed by The IIA through a
formal approval process.
 Describes practices for effective
implementation of The IIA's Core
Principles, Definition of Internal
Auditing, Code of Ethics, and
Standards
 More specific but not
mandatory guidance
 May not be applicable to all
internal audit function
RECOMMENDED ELEMENTS
 Implementation Guidance
 Supplemental Guidance

1. CORE PRINCIPLES IMPLEMENTATION GUIDANCE

 Define tangible internal  Implementation Guides
audit function o Getting Started - brings together
effectiveness. the relevant mandatory elements
 for the internal audit function to be of the IPPF.
 considered effective, each of the
principles needs to be present and
successfully operating
 Demonstrates integrity,
competence, due
professional care, quality,
and continuous
improvement.
 Is objective and free from
undue influence.
 Aligns with strategies,
objectives, and risks of the
org.
 Appropriately positioned
and adequately resourced.
 Communicates effectively.
 Provides risk-based
assurance.
 Insightful, proactive and
future focused.
 Promotes organizational
improvement.
DEFINITION OF INTERNAL AUDITING
 Independence- freedom
from conditions that
threaten the ability of the
internal audit activity to
carry out internal audit
responsibilities in an
unbiased manner
 Objectivity- unbiased
mental attitude that allows
internal auditors to
perform engagements in
such a manner that they
believe in their work
product and that no quality
compromises are made
CODE OF ETHICS
 Principles relevant to
profession & practice of internal
auditing, and Rules of Conduct
that describe behavior expected of
internal auditors.
 applies to both parties and
entities
that provide internal audit services.
 to promote an ethical culture in
the global profession of internal
auditing.
o Considerations for
Implementation - specific issues
of implementation for specific
standard
o Consideration for
Demonstrating
Conformance - how to
implement
the Standard.
 Not intended to give detailed
processes and procedures but
to provide potential or
acceptable approaches to
achieving conformance with the
Standards
 Each of the Standards has an
Implementation Guide (IG) and
each guide has the same basic
structure
SUPPLEMENTAL GUIDANCE
 Not organized by standard or
other mandatory elements of the
IPPF
 Addresses topic areas, industry
sector specific issues, processes
and procedures, various tools
and techniques, and examples
of deliverables
 Produced by a number of IIA
committees
the
 STANDARDS
 delineates the requirements for
performing a broad range of
internal audit activities and for
evaluating internal audit
performance
 International Standards for the
Professional Practice of Internal
Auditing (Standards)

Fundamental Phases in the Internal Audit Engagement Process (P,P,C)

1. Planning the engagement-MEETING MUNA
a) Obtaining an understanding of the auditee/customer
b) Setting the engagement objectives
c) Determining the required evidence
d) Deciding the nature, timing, and extent of audit tests
2. Performing the engagement - application of specific audit
procedures; evaluating the evidence gathered (FIELD WORK)
3. Communicating engagement outcomes - accurate, objective,
clear, concise, constructive, complete, timely (CLOSING) VALIDATINGGG…
OBSERVATION…… WRITE-UP… FINDINGSSS…. MONITORINGGGG

Governance - combination of processes and structures implemented

by the board to inform, direct, manage, and monitor the activities of
the organization toward the achievement of its objectives
Risk Management - process to identify, assess, manage, and control
potential events or situations to provide reasonable assurance
regarding the achievement of the organization's objectives
Control - Any action taken by management, the board, and other
parties to manage risk and increase the likelihood that established
objectives and goals will be achieved