Kode Etik dan IA Standard Dr Rilla Gantino, SE., AK., MM PERTEMUAN II Dr Rilla Gantino, SE., AK., MM MAKSI-FEB

KEMAMPUAN AKHIR YANG DIHARAPKAN Memahami Standar Praktek Internal Audit Memahami Kode Etik

Basic Principles Governing Internal Audit Integrity, Objectivity and Independence Confidentiality Due Professional Care , Skills and Competence Work performed by Others and Documentation Planning Evidence Internal Control; and Risk Management System Reporting

INTERNATIONAL PROFESSIONAL PRACTICES FRAMEWORK (IPPF) Mandatory Guidance Strongly Recommended Guidance Definition of I/A Position Papers (PPs) Code of Ethics Practice Advisories (PAs) The standards Practice Guides (PGs) Internal Audit Framework

Following are the types of the standards: Internal auditors carry out their work in accordance with the given set of rules, guidelines, regulations and standards. These standards are provided by the Institute of Internal Auditors, USA, are known as, International Standards for the Professional Practice of Internal Auditing (the standards). The standards provide guidance on assurance and consulting activities of an internal auditor. The application of these standards is mandatory for internal auditors during their work. Following are the types of the standards: Attribute Standards pertain to the company and team/staff performing the audit work. Performance Standards are about the nature of internal auditing and provide quality criteria for the performance of the work. Implementation Standards provide guidance for each attribute or performance standard to be applicable to assurance (A) or consulting (C) activity.

INTERNAL AUDIT CHARTER According to the standards, the purpose, scope, authority and responsibility must be clearly mentioned in an internal audit charter. A typical internal audit charter outlines the following information: Mission Scope Responsibilities of management Responsibilities of internal auditors Relationship with external auditors Status of internal auditors Authority of internal auditors Reporting Conclusion N.B.: Internal audit charter must be reviewed on periodic basis and should be approved by the board. It helps a lot in the conduct of work. For all special assignments approval should be taken from the board.

IA Role in Corporate Oversight Four pillars – internal audit, executive management, external audit, & Board of directors/ steering committee Combination of processes & organisational structures implemented by management to inform, direct, manage and monitor the project’s resources, strategies & policies towards the achievement of its objectives Public sector governance Principles - transparency, integrity, accountability May include review of sufficiency of human resources, training needs, policies, etc.

Internal audit staff is not authorized to: AUTHORITY The staff of Internal Audit Department reports to CAE who reports to Audit Committee or the board directly. CAE has full and free access to the audit committee or the board for discussion and resolution of all matters and issues pertaining to his work. For administrative purposes, CAE may report to CEO/GM but for functional purposes shall always report to audit committee or the board directly. Internal audit is fully authorized to: Have complete and unrestricted access to records, personnel, and physical properties/assets relevant to the performance of I/A engagement. Delegate duties, allocate resources, select team, determine scope of work, budget time & cost, and select required techniques/procedures to accomplish objectives. Obtain necessary assistance of personnel in audited company and other specialized services within or outside the organization. Internal audit staff is not authorized to: Perform any operational duties for a company. Initiate or approve accounting transactions external to the Internal Audit Department. Direct the activities of any department’s employees not employed by the Internal Audit Department, except those who have been assigned to assist the audit team.

TAMBAHAN BACAAN

Learning objective 14.2 Current standards for internal auditor (issued by IIA) The IIA is the global standard setter for internal auditing. The International Professional Practices Framework (IPPF) is issued by IIA. Purposes: delineate basic principles provide a framework for performing and promoting IA activities establish the basis for the measurement of IA performance foster improved organisational processes and operations. The first slide provided for this section outlines the purposes of the IIA standards, while slide 14.8 outlines the recently developed International Professional Practices Framework (IPPF).  It is advisable for instructors to elaborate using subsequent slides, which distinguish between Attribute Standards and Performance Standards.   The four categories of attribute standards are outlined in the textbook. The slides, however, only cover two categories; independence and proficiency and due professional care. Copyright © 2012 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 5e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett

International Professional Practices Framework (IPPF) Copyright © 2012 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 5e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett

Attribute and performance standards The International IIA Standards consist of: Attribute standards (the 1000 Series): address characteristics of organisations and individuals performing IA activities. Performance standards (the 2000 Series): describe the nature of IA activities and provide criteria against which performance of these services can be measured. Copyright © 2012 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 5e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett

Current attribute and performance standards of the IIA Attribute standards Performance standards 1000 Purpose, authority, and responsibility 2000 Managing the internal audit activity 1100 Independence and objectivity 2100 Nature of work 1200 Proficiency and due professional care 2200 Engagement planning 1300 Requirements of the quality assurance and improvement program 2300 Performing the engagement 2400 Communicating results 2500 Monitoring process 2600 Resolution of senior management’s acceptance of risks Copyright © 2012 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 5e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett

Internal audit charter Attribute standard 1000 outlines that the purpose, authority and responsibility of the internal audit activity should be formally defined and set out in an internal audit charter. The internal audit charter should: establish IA’s position within the organisation establish access to records, personnel and physical properties relevant to the performance of engagements, and define the scope of internal audit activities. This charter should be approved by the board of directors. Copyright © 2012 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 5e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett

Independence and objectivity (IIA standard 1100) Essential that IA is, and is seen to be, independent of the area being audited. IA department should report to board of directors or audit committee. Head of IA should have direct access to board of directors. Board should approve appointment or removal of head of IA. Management and Board should be aware of work schedules, staff requirements and budgets of IA department. Copyright © 2012 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 5e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett