Code of Ethics for Auditors

Internal auditing is an integral part of the governance process and contributes to the effectiveness and efficiency of an organization’s operations. Internal auditors play a critical role in ensuring that organizations operate ethically and in compliance with applicable laws and regulations. The Institute of Internal Auditors (IIA) has established a Code of Ethics to guide the conduct of internal auditors and promote an ethical culture within the profession.

Purpose of the Code of Ethics

The purpose of the IIA’s Code of Ethics is to promote an ethical culture in the profession of internal auditing by establishing principles and expectations governing the behavior of individuals and organizations in the conduct of internal auditing. The code outlines the minimum requirements for conduct and behavioral expectations rather than specific activities.

Applicability of the Code of Ethics

The IIA’s Code of Ethics applies to both entities and individuals that perform internal audit services. This includes IIA members, recipients of or candidates for IIA professional certifications, and those who perform internal audit services within the Definition of Internal Auditing.

Principles of the Code of Ethics

Internal auditors are expected to apply and uphold the following principles:

1. IntegrityThe integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgment. Auditors should act with honesty, diligence, and responsibility.
2. ObjectivityInternal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Auditors should make unbiased assessments and not be unduly influenced by their interests or others.
3. ConfidentialityInternal 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.
4. CompetencyInternal auditors apply the knowledge, skills, and experience needed in the performance of internal audit services. Auditors should engage only in services for which they have the necessary qualifications.

Rules of Conduct

The Code of Ethics also includes specific rules of conduct that auditors should follow. These rules are intended to guide the ethical conduct of internal auditors and include the following:

1. Performing work with honesty, diligence, and responsibility.
2. Observing the law and making required disclosures.
3. Not engaging in illegal activities or acts that discredit the profession or the organization.
4. Respecting and contributing to the legitimate and ethical objectives of the organization.
5. Avoiding activities or relationships that may impair their unbiased assessment.
6. Disclosing all material facts that may affect the reporting of activities under review.
7. Being prudent in the use and protection of information acquired during their duties.
8. Using information in a manner consistent with the law and the organization’s ethical objectives.
9. Engaging only in services for which they have the necessary knowledge, skills, and experience.
10. Performing internal audit services in accordance with the International Standards for the Professional Practice of Internal Auditing.
11. Continually improving their proficiency and the quality of their services.

Conclusion

The IIA’s Code of Ethics provides a framework for ethical conduct for internal auditors. By adhering to the principles and rules of conduct outlined in the code, internal auditors can help to promote an ethical culture within their organizations and contribute to the effectiveness and efficiency of the internal audit function.

References

1. IIA Code of Ethics
2. UNC-Chapel Hill Office of Internal Audit: Institute of Internal Auditors’ Code of Ethics
3. IIA Code of Ethics: Mandatory Guidance

FAQs

What is the purpose of the code of ethics for auditors?

The code of ethics for auditors is designed to promote an ethical culture within the profession of internal auditing and to establish principles and expectations governing the behavior of individuals and organizations in the conduct of internal auditing.

Who does the code of ethics apply to?

The code of ethics applies to both entities and individuals that perform internal audit services, including IIA members, recipients of or candidates for IIA professional certifications, and those who perform internal audit services within the Definition of Internal Auditing.

What are the principles of the code of ethics?

The principles of the code of ethics are integrity, objectivity, confidentiality, and competency.

What are some specific rules of conduct that auditors should follow?

Some specific rules of conduct that auditors should follow include performing work with honesty, diligence, and responsibility; observing the law and making required disclosures; not engaging in illegal activities or acts that discredit the profession or the organization; respecting and contributing to the legitimate and ethical objectives of the organization; avoiding activities or relationships that may impair their unbiased assessment; disclosing all material facts that may affect the reporting of activities under review; being prudent in the use and protection of information acquired during their duties; using information in a manner consistent with the law and the organization’s ethical objectives; engaging only in services for which they have the necessary knowledge, skills, and experience; performing internal audit services in accordance with the International Standards for the Professional Practice of Internal Auditing; and continually improving their proficiency and the quality of their services.

Why is it important for auditors to adhere to the code of ethics?

Adhering to the code of ethics is important for auditors because it helps to promote an ethical culture within the profession, builds trust and confidence in the internal audit function, and ensures that auditors are conducting their work in a professional and ethical manner.

What are the consequences of violating the code of ethics?

Violations of the code of ethics may result in disciplinary action, including suspension or expulsion from the IIA, loss of certification, or other sanctions.

How can auditors stay up-to-date on the code of ethics?

Auditors can stay up-to-date on the code of ethics by regularly reviewing the IIA’s website, attending IIA conferences and training events, and reading professional publications.

Who is responsible for enforcing the code of ethics?

The IIA is responsible for enforcing the code of ethics. The IIA’s Ethics Committee is responsible for investigating alleged violations of the code and recommending appropriate disciplinary action.