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11-Which core principle of The IIA’s Code of Ethics do the following actions violate?The internal auditor assumes operational duties on a temporary basis.The internal auditor performs an audit ina department managed by the auditor’s father.The internal auditor managed the department being audited 6 months prior to the audit.The internal auditor receives a bonus based on the number of observations generated during anaudit.A. Objectivity.B. Integrity.C. Competency.D. Independence.Answer (A) iscorrectAccording to The IIA’s Code of Ethics, “Internal auditors exhibit the highest level of professional objectivityin gathering, evaluating, and communicating information about the activity or process being examined.Internal auditors make a balanced assessment of all the relevant circumstances and are not undulyinfluenced by their own interest or by others in forming judgments.” The auditor should not participate inany activity or relationship that may impair or appear to impair an unbiased assessment. Assumingmanagement responsibilities and auditing an area in which the auditor had such responsibilities within 1year violate the objectivity principle. Performing an audit in a department managed by a family memberalso violates this principle because of an actual or implied conflict of interest. Accepting a bonus based onwork accomplished during an audit also may impair or be presumed to impair the auditor’s objectivity.Answer (B) isincorrect..
Integrity relates to the auditor’s adherence to applicable laws and the organization’s ethical values. It isthe basis for reliance on the auditor’s judgments..
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Competency pertains to the auditor’s knowledge, skills, andexperience in performing internal audit work..
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Independence is not one of the core principles of The IIA Code of Ethics.
12-During an engagement, an employee with whom you have developed a good workingrelationship informs you that she has some information about senior management that isdamaging to the organization and may concern illegal activities. The employee does not want hername associated with the release of the information. Which of the following actions is consideredto be unethical?..
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The Code of Ethics is a statement of principles and expectations governing behaviour of individuals and organisations in the conduct of internal auditing.
Summary
| Rule | Principle |
| Integrity | The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgement. |
| Objectivity | Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors make a balanced assessment of all the relevant circumstances and are not unduly influenced by their own interests or by others in forming judgements. |
| Confidentiality | Internal 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. |
| Competency | Internal auditors apply the knowledge, skills and experience needed in the performance of internal auditing services. |
The Code of Ethics
This is the full text of the Institute's Code of Ethics.
The purpose of the Code is to promote an ethical culture in the profession of internal auditing.
A code of ethics is necessary and appropriate for the profession of internal auditing, founded as it is on the trust placed in its objective assurance about risk management, control, and governance.
The Institute's Code of Ethics provides principles and rules of conduct under four headings:
- Integrity
- Objectivity
- Confidentiality
- Competency
The Rules of Conduct describe behaviour norms expected of internal auditors. These rules are an aid to interpreting the Principles into practical applications and are intended to guide the ethical conduct of internal auditors. Below they are set out together with the principle they interpret.
The Code of Ethics provides guidance to internal auditors serving others. 'Internal auditors' refers to Institute members and those who provide internal auditing services within the definition of internal auditing.
Applicability and enforcement
This Code of Ethics applies to both individuals and entities that provide internal auditing services.
For Institute members, breaches of the Code of Ethics will be evaluated and administered according to The Institute's Disciplinary Procedures. The fact that a particular conduct is not mentioned in the Rules of Conduct does not prevent it from being unacceptable or discreditable, and therefore, the member liable to disciplinary action.
The Code of Ethics
1. Integrity Principle
The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgement.
Rules of Conduct
Internal auditors:
1.1 Shall perform their work with honesty, diligence and responsibility.
1.2 Shall observe the law and make disclosures expected by the law and the profession.
1.3 Shall not knowingly be a party to any illegal activity, or engage in acts that are discreditable to the profession of internal auditing or to the organisation.
1.4 Shall respect and contribute to the legitimate and ethical objectives of the organisation.
2. Objectivity Principle
Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors make a balanced assessment of all the relevant circumstances and are not unduly influenced by their own interests or by others in forming judgements.
Rules of Conduct
Internal auditors:
2.1 Shall not participate in any activity or relationship that
may impair or be presumed to impair their unbiased assessment. This participation includes those activities or relationships that may be in conflict with the interests of the organisation.
2.2 Shall not accept anything that may impair or be presumed to impair their professional judgement.
2.3 Shall disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review.
3. Confidentiality Principle
Principle Internal 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.
Rules of Conduct
Internal auditors:
3.1 Shall be prudent in the use and protection of information acquired in the course of their duties.
3.2 Shall not use information for any personal gain or in any manner that would be contrary to the law or detrimental to the legitimate and
ethical objectives of the organisation.
4. Competency Principle
Internal auditors apply the knowledge, skills and experience needed in the performance of internal auditing services.
Rules of Conduct
Internal auditors:
4.1 Shall engage only in those services for which they have the necessary knowledge, skills and experience.
4.2 Shall perform internal auditing services in accordance with the International Standards for the Professional Practice
of Internal Auditing.
4.3 Shall continually improve their proficiency and the effectiveness and quality of their services.
About the Code of Ethics
The Code of Ethics is authoritative guidance for the internal audit profession from the Global Institute of Internal Auditors. It is part of the International Professional Practices Framework.
Members of the Chartered Institute of Internal Auditors all agree to follow the Code of Ethics and the Code of Professional Conduct.
Content reviewed: 14 December 2021