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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
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