In the latest evolution in internal audit practices, the Global Internal Audit Standards will replace the International Professional Practices Framework (IPPF) from January 2025. The Standards are designed to address contemporary challenges and expectations faced by internal auditors. They emphasise a stronger alignment of internal audit’s activities with organisational goals and public interest, enhance key ethical principles, and place a greater emphasis on internal audit governance. At Andile, we have identified 5 key differences between the IPPF and the Global Internal Audit Standards that you should be aware of:
1. Public Interest Focus
The Standards underscore the importance of serving the public interest through the assurance provided by internal audit on an organisation’s governance practices. This focus on public interest reinforces the role of internal auditors in promoting transparency and accountability within organisations.
Internal audit functions must now critically evaluate their strategies and audit plans to ensure they are designed with public interest in mind in addition to the interests of other stakeholders.
2. Professional Courage
A notable addition to the Standards is the explicit requirement for professional courage. This requirement ensures that internal auditors remain steadfast in their duty to uphold ethical standards and act in the best interest of the organisation and its stakeholders, as internal auditors are expected to take appropriate actions and report concerns, even under difficult conditions.
To encourage internal auditors to demonstrate professional courage, the Chief Audit Executive and the organisation’s management must ensure that internal auditors are adequately protected at all times. To this end it is important to distinguish between an internal auditor’s professional responsibilities and their role as employees of the organisation. In the former role, internal auditors are required to demonstrate professional courage, and the CAE needs to provide adequate protection to the reporting internal auditor through the function’s policies and processes. In the latter, internal auditors must adhere to the organisation’s whistleblower policies.
3. Objectivity vs. Independence
The Standards make a clear distinction between objectivity and independence. Objectivity refers to the mindset of internal audit staff, ensuring they remain unbiased and impartial in their assessments. Independence, on the other hand, pertains to the internal audit function’s stature within the organisation, ensuring it operates free from undue influence.
4. Internal Audit Governance
Domain III of the Standards is dedicated to internal audit governance. It addresses the specific responsibilities of the Board and senior management towards the internal audit function. This focus significantly impacts the content of the Internal Audit Charter, highlighting the need for clear roles, responsibilities, and accountabilities. Strengthening internal audit governance ensures that the internal audit function is adequately supported and empowered to fulfil its mandate.
5. Strategy Requirement
Domain IV of the Standards mandates that the internal audit function must have a comprehensive strategy, not just an annual plan. This strategy should outline long-term goals, priorities, and initiatives, ensuring alignment with the organisation’s overall objectives. Additionally, the Standards require effective management of the internal audit function’s performance, with clear performance measures and reporting mechanisms in place. This strategic approach enhances the internal audit function’s ability to add value and drive continuous improvement.
How Can We Assist?
To help you align with the new Global Internal Audit Standards, we offer a range of services designed to enhance your internal audit function:
- Training on the New Standards: Equip your internal audit team with the knowledge and skills needed to comply with the new Standards.
- Readiness Assessment: A thorough assessment of your Internal Audit Charter, Methodology, and Manual to identify gaps and areas for improvement.
- Update Internal Audit Documentation: Update your Internal Audit Charter, Methodology, and Manual to align with the Global Standards, ensuring compliance and best practices.
- Thought Leadership: Provide insights and guidance on internal audit best practices, helping you stay ahead of industry trends and challenges.
- Internal Audit Strategy Development: Assist in developing a comprehensive internal audit strategy that aligns with your organisation’s goals and objectives.
- Performance Measures and Reporting Packs: Develop performance measures and reporting packs to ensure your internal audit function drives the correct behaviour and avoids unintended consequences.
- QAR Programme Update: Update your Quality Assurance Review (QAR) programme to conform with the new standards.
- Customised Quality Assurance Review Programme: Provide a tailored quality assurance review programme for your internal audit function.
- Quality Assurance Review Programme Management: Manage your quality assurance review programme to ensure ongoing compliance and continuous improvement.