Internal audit consultations
The Chartered Institute of Internal Auditors (Chartered IIA) has published, for consultation, a Draft Internal Audit Code of Practice (the Code). At the same time the Institute of Internal Auditors (IIA) has issued a consultation on the review of the Three Lines of Defence model.
Internal Audit Code consultation
The new Code builds on the work already done by the Chartered IIA to develop a Code of Practice for the financial services sector which has seen improvements in the delivery and value of the internal audit function. It is hoped that the new Code will deliver similar improvements in other sectors.
The progress of the Code is being overseen by an independent Internal Audit Code of Practice Steering Committee created by the Chartered IIA. This committee includes amongst others, two senior ICAS members, namely:
- Brendan Nelson CA (Chair of the Internal Audit Code of Practice Steering Committee and Audit Committee Chair of BP and Past President of ICAS)
- Paul Boyle CA OBE (Committee Adviser, Chairman of Protect and past President of the Chartered IIA)
Recent high-profile corporate scandals and failures (e.g. Carillion, Patisserie Valerie, BHS et al) have created a sense of dissatisfaction on the part of the public, capital markets and the government over the governance of these entities and the role of the auditor.
Much of the “heat” of this scrutiny by government and the media is directed towards external audit but questions are also being raised about the role of internal auditors. The Chartered IIA, have thus published the draft Code to bolster corporate governance and complement the Global Institute of Internal Auditor’s International Professional Practice Framework (IPPF) and its International Standards for the Professional Practice of Internal Auditing (the Chartered IIA Standards).
The target audience are internal audit professionals, audit committee members and chairs, executive and non-executive directors, audit firms, regulatory bodies, accounting, auditing and governance academics and their students, shareholders and investor groups.
The new draft Code is based upon the Chartered IIA’ s Code of practice for financial services firms from 2013 and consists of 7 sections ranging from the role and mandate of internal audit, to the independence and authority of internal audit.
The draft Code has 30 recommendations including that internal audit’s scope should be unrestricted and internal audit should have the right to attend board and executive meetings.
The consultation period is open until 11 October 2019. The Chartered IIA has also published a helpful summary to accompany the Code. The Code will be of considerable interest to those ICAS members working in internal audit or having regular dealings with internal audit.
Consultation on Three Lines of Defence model
The Three Lines of Defence model is a key part of the organisational risk management process. The Institute of Internal Auditors (IIA) is undertaking a major review of the model to ensure it remains valuable and useful in today's world.
While it has been adopted by many global organisations over the 20+ years since it introduction, it has faced criticism that it is too restrictive and focuses on defensive actions rather than promoting proactive actions.
At a time when trust in organisations is falling, the IIA believe it is time to refresh the model to acknowledge changing stakeholder expectations and the more complex business environment.
The consultation comprises a series of questions, in the form of an online survey on issues including the scalability of the model and the role of internal audit in facilitating greater organisational collaboration and co-ordination.
The consultation period is open until 18 September 2019.
Can you help?
ICAS is keen to hear from anyone willing to participate in, or help to inform, the ICAS responses to these consultations. If you would like to be involved then please contact Anne Adrain.
