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What is Ethics?
Ethics in general:
Set of moral principles, values or acceptable behaviour
Science of morals, study of principles of human duty, rules of conduct
Provide standard of conduct in daily life
Breach of ethics
Corruption
Definition of ethics:
A set of moral principles that distinguish between what is right and what is wrong
It is a set of values that guide the conduct and the behavior of the individuals, enabling them
to differentiate between rights and wrong, good and bad and what should and should not be
done
Ethical behavior is not an act BUT a HABIT
should not rest with the management should be the power of Audit
Committee
Internal auditor should be independent of the activities they audit, work
should be carried out freely, objectively, impartially an unbiased
judgments
Could be achieved through organisational status and objectivity
- Organisational status: Should be sufficient to assure broad range of
audit coverage adequate consideration of an effective action on audit
findings and recommendations
- Objectivity: Internal auditor should have independent mental attitude,
honest belief in their work and avoid any conflict of interest
INTERNATIONAL PROFESSIONAL
PRACTICES FRAMEWORK [IPPF]
provide
understanding on issues of governance,
risk and control, and the roles and
responsibilities of internal auditors.
Practice Advisories provide guidance
on conforming to the Standards
Practice Guides provide information
on practical tools and techniques in
conducting the internal audit
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Principles
Rules of conduct
2. Rules of Conduct
The 12 behavioral
norms that internal
auditor should follow
to put the Principles
into practices.
10
Components of
Code of Ethics
1. Principles
1. Integrity
2. Rules of
Conduct
Shall perform
with honesty,
diligence &
responsibility
Internal auditors
establish trust, thus
provides the basis for
reliance on their
judgment.
Principles
2. Objectivity
2. Rules of
Conduct
Internal
auditors Shall
not
exhibit the highest
participate
in
level of objectivity in
any activity or
gathering,
relationship that
evaluating,
&
may impair or
communicating
be presumed to
information.
impair
their
Internal
auditors
unbiased
make
a
balanced
assessment.
assessment of all the
This
activity
relevant
includes those
circumstances
and
may
be
in
are
not
unduly
conflict with the
influenced by their
interest of the
own interests or by
organization.
others in forming
judgments.
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Objectivity
To be objective, internal auditors:
Aware of potential threats to their
objectivity such as personal
relationships or conflict of interests and
Avoiding misleading languages.
[Example accepting gifts from auditees,
auditing an operation in which their
works]
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3.
Confidentiality
1.Principles
2. Rules of
Conduct
Internal
auditors
respect the
value &
ownership of
information
Internal
auditors do
not disclose
information
without
appropriate
authority
unless there
is legal or
professional
right
Shall be
prudent in
the use and
protection of
information
required.
Shall not use
information
for any
personal gain
or in any
manner that
would be
contrary to
the law or
detrimental
to the
legitimate
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4. Competency
1. Principles
2. Rules of
Conduct
Internal
auditors
apply the
knowledge,
skills and
experience
needed.
Shall engage
only in those
services for
which they
have the
necessary
knowledge,
skills and
experience.
Shall perform
in
accordance
with the
Standards
Shall
continually
improve
proficiency
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17
Component of ISPPIA
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Type of Standards
19
Attributes Standards
20
Attributes Standards
21
Performance Standards
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Practice Advisories
Provide concise and timely guidance
as to how the Standards might be
implemented.
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24
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Internal Auditor as
Whistleblower?
Internal auditor may encounter misconduct and
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List of whistleblowers
Cynthia Cooper of Worldcom
Sherron Watkin of Enron
Other cases of whistleblower
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END OF TOPIC 3