2

ACE450 – Management
Audit
Chapter 2
Internal Audit Standards

Ali Nawari Hasan

Department of Accounting
School of Management
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 2

The International Professional Practices

Framework (IPPF)
And
The (new) Global Internal Audit Standards

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 2

Introduction
 In comparison to the public accountants, the internal
audit history is quite young
 1941 - the first professional organization formed (The
Institute of Internal Auditors)
 1943 - the first professional journal published (The
Internal Auditor)
 1947- the Statement of Responsibilities
 1968 - the Formal Code of Ethics
 1974 - the first CIA exam in the US.
 1978 - the Standard for Professional Practice
 January 2009 – International Professional Practices
Framework (IPPF)
 January 2024 – Global Internal Audit Standards

 Released 9 January 2024

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 Effective 9 January 2024 Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.
 The Internal Audit Standards
• Standards allow specialists performing similar work
to call themselves professionals because they are
following a recognized and consistent set of “best
practices”.
• The IIA is the global standard setter for internal
auditing.
• The International Professional Practices Framework
(IPPF) is the original standards issued by the IIA to
guide IA’s work.
• This has recently been superseded by the Global
Internal Audit Standards.

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The Internal Audit Standards

 The purpose of IA standards is to:

 Delineate the basic principles that represent the
practice of internal auditing as it should be.
 Provide a framework for performing a broad range of
value-added internal audit activities.
 Establish the basis for measurement of internal audit
performance (quality).
 Foster improved organizational
processes and operations.
• Terms employed in the standards:
“must” - specify an unconditional requirement
“should” - conformance is expected unless,
when applying professional judgment,
circumstances justify deviation
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 2
IIA’s International Professional Practices
Framework (IPPF)
The Institute of Internal Auditors (IIA) (USA) oversees and sets
standards for internal auditing internationally.
(In Malaysia – IIAM)
IIA’s International Professional Practices Framework (IPPF):
ISPPIA - International
Standards for the Attribute
Mandatory Standards
Guidance Professional Practice of
Internal Auditing (the Performance
Definition standards) Standards
Ethics Implementation
Strongly
Recommended Standards
Position Papers, Practice
Guidance Advisories and Practice
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 2

IIA’s International Professional

Practices Framework (IPPF)
• Attribute Standards
 Applies to all IA services
 Address the characteristics of organizations
and individuals performing IA services
 Purpose, Authority, and Responsibility
 Independence and Objectivity
 Proficiency and Professional Due Care
 Quality Assurance and Improvement
programme

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 e
Som ghts..
li
Internal audit charter
high
• Attribute standard 1000 outlines that the purpose,
authority and responsibility of the internal audit
activity should be formally defined and set out in
an internal audit charter.
• The internal audit charter should:
– establish IA’s position within the organization
– establish access to records, personnel and physical
properties relevant to the performance of
engagements, and
– define the scope of internal audit activities.
• This charter should be approved by the board of
directors.
14-8
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Independence and objectivity e

Som ghts..
li
(IIA standard 1100) high

 It is essential that IA is, and is seen to be,

independent of the area being audited.
 IA department should report to board of directors
or audit committee.
 Head of IA should have direct access to board
of directors.
 Board should approve appointment or removal
of head of IA.
 Management and Board should be aware of
work schedules, staff requirements and budgets
of IA department. th i s in
o r e on ter on…
M s ’ la 14-9
ic
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 19

Proficiency and due professional care e

Som ghts..
li
high
 IIA Standard 1220 outlines that it is the internal
audit department’s responsibility to assign staff
to each audit who collectively possess the
knowledge, skills and other competencies
needed to conduct the audit.
 The audit planning process should include a
strategic audit plan and a tactical audit plan.
 In undertaking their planning, the auditor should
consider the audit universe, which is an
inventory of audit areas that is compiled and
maintained to identify areas for audit during the
audit planning process. o n th is in
or e M
k - b a s ed
‘ris t r o n…
14-10
e
g ’ l a
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 21

IIA’s International Professional

Practices Framework (IPPF)
• Performance Standards
 Applies to all IA services
 Describe the nature of IA services
 Provide quality criteria against
which performance of IA
services can be
measured
 Managing IA Activity, Nature of work,
Engagement Planning, Performing the
Engagement,
Communicating results, Monitoring Progress,
Resolution of Senior Management’s Acceptance
of Risks
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 19

Performance standards e
Som ghts..
li
high
 Require IAs to plan each audit; collect, analyse,
interpret and document information to support results;
report results; and take appropriate follow up action.
 Should also be a periodic report to the board on IA’s
purpose, authority, responsibility and performance
relative to its plan. Require IA to consider:
 2000: Management of the IA department
 2100: Evolving nature of IA work
e o n this in
 2200: Engagement planning Mo r
s k - b a s ed
‘r i te r o n…
 2300: Performing the engagement g’ l a
auditin
 2400: Communicating results
 2500-2600: Monitoring progress and management’s
acceptance of risks.
14-12
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 21

IIA’s International Professional

Practices Framework (IPPF)
• Implementation Standards
 Depends on the type of engagement
 Provide guidance applicable to specific types
of engagement
 For example:
 Compliance audit
 Fraud investigation
 Control self-assessment project
 Industry-specific, regional or
other types of IA
services (other
assurance and consulting
activities). IPPF-Standards-2017.pdf
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 21

The Global Internal Audit

Standards

Special mention

Since the GIAS will become effective 9 January 2025, by the time
you graduate and work, there will no longer be IPPF, which will be
effectively superseded by GIAS.

Therefore, you will need to know about GIAS too this time around.

Microsoft Edge
PDF Document

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 21

Assignment

Tutorial_IA Standards

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