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Internal Audit Quality
interference exists, the CAE is empowered of current activities, trends and emerging • Scope and frequency of internal and
to disclose such interferences to the board issues for providing relevant advice and external assessments,
and discuss its implications. recommendations apart from the existing
competencies needed to remain proficient. • Qualifications and independence
1112 – CAE Roles Beyond Internal of assessor(s) and assessment team,
Auditing: 1300 – Quality Assurance and including potential conflict of interest
This new standard added, emphasizes Improvement Program: The Interpretation
the need to have appropriate safeguards is amended stating that a quality assurance • Assessor’s Conclusions
in place when the CAE’s responsibilities and improvement program should be • Corrective Action Plans
extends beyond Internal Auditing. designed to enable an evaluation whether
These safeguards are necessitated to the Internal Audit Department confirms Amendments to Performance
limit impairments to independence or with the Standards only and whether Standards:
objectivity. The external assessors will have internal auditors apply the Code of Ethics.
to have to ensure that Audit Committee A further responsibility is entrusted on the The amendments and its possible effects to
Members are monitoring the independence CAE by encouraging Board’s oversight in this section are covered below:
of the CAE and obtaining assurance (from this quality assurance and improvement
functions other than Internal Audit) on the program. 2000 – Managing the Internal Audit
areas of responsibilities beyond internal Activity: The CAE is responsible for
audit. 1312 – External Assessments: The effectively managing the Internal Audit
Interpretation: This new interpretation Interpretation is amended stating the full Department by always considering the
states that where the CAE is requested to external assessments or a self-assessment trends and other emerging issues impacting
take additional roles and responsibilities with independent external valuation its organization thereby adding value to
beyond internal auditing such as are modes of accomplishing external the organization and its stakeholders. The
compliance, risk management, etc. and assessments. The external assessor is Internal Audit Department adds value
assuming such roles and responsibilities made responsible to conclude its external to the organization and its stakeholders
might impair the independence and assessment by stating whether the internal when it considers Company’s strategies,
objectivity of the internal audit activity audit department has / has not confirmed objectives, risks and strives to offer ways to
and internal auditor respectively, so with the Code of Ethics and Standards enhance governance, risk management and
safeguards should be in place to limit such and to support that, the external assessor’s control processes and objectively provide
impairments. Board will have additional reports can include operational or strategic relevant assurance.
responsibilities of having appropriate comments. The CAE is entrusted with
safeguards in place by undertaking the responsibility of encouraging board’s 2010 – Planning: The Interpretation
oversight activities that would address such oversight in the external assessment is partially amended thereby having
potential impairments due to additional thereby reducing possibilities of perceived responsibility on CAE to consult with
roles sought by the CAEs. Board can or potential conflict of interest. senior management and board rather
further conduct periodic evaluation of than to use his / her own judgement in
reporting lines and responsibilities and 1320 – Reporting on the Quality Assurance understanding the organization’s strategies,
develop alternative processes for obtaining and Improvement Program: The CAE is key business objectives, associated risks
assurance pertaining to the areas of such entrusted with responsibility of having and risk management process to develop
additional responsibilities. specific disclosures on the reporting on a risk based plan. The CAE’s role as a
1130.A3: This new sub-standard the quality assurance and improvement Consultant is required only when no risk
under Standard 1130 (Impairment to program. They being: management framework exists
Independence and Objectivity) and states within the entity.
that internal audit department can conduct
an assurance service to a previously 2050 – Coordination and Reliance: The
provided consulting engagement. This is Standard title is added with the word
possible subject to the consulting service “Reliance.” The CAE is entrusted with
provided earlier did not impair objectivity the responsibility of sharing information,
then and individual objectivity is duly coordinating activities and consider relying
managed while assigning resources to this upon the work of other internal and
engagement. Thus, the CAE has to ensure external assurance and consulting service
that objectivity is not compromised under providers to ensure proper coverage and
such circumstances. minimize duplication of efforts.
1210 – Proficiency: The Interpretation here The Interpretation is a new addition.
is amended by rewording “Professional
Proficiency” to “Proficiency”. The definition
here is enriched by including consideration
26 INTERNAL AUDITOR - MIDDLE EAST MARCH 2017