IIA consults on code of practice to raise internal audit standards

The Chartered Institute of Internal Auditors (IIA) has begun a consultation on an internal audit code of practice in the wake of high-profile corporate failures

The code of practice would provide guidance for businesses in a bid to reduce the risk of major corporate collapses following public concerns over governance at companies including Carillion, BHS and Patisserie Valerie.

The proposed code would be the first time that businesses and organisations outside of the financial services sector would be given comprehensive benchmarks to meet and detailed guidance about running an effective internal audit function. It is intended to boost the status, standards, scope and skills of internal audit. 

It follows on from the IIA’s financial services code, which was published in 2013 in response to the banking collapse. The institute says that within two years, the code had raised the scope and standing of internal audit in financial services, with the number of chief audit executives attending executive committees rising from 48% to 84% and the number of organisations carrying out audit work on risk culture rising from 54% to 93%.

The new code for non-financial organisations makes 30 recommendations to strengthen corporate governance including unrestricted access for internal audit, full access for internal audit to senior meetings including the right to attend executive committee meetings and full access for internal audit to key management information. 

The consultation will also consider whether the new code should include guidance on how an internal audit function may provide assurance where it had previously performed consulting services, and best practice in the outsourcing of internal audit provision. 

The new code is being developed by an independent steering committee set up by IIA, chaired by Brendan Nelson, audit committee chair of BP.

Nelson said: ‘One of the best ways to help organisations better protect their assets and manage risk is to boost the status, standards, scope and skills of internal audit.

‘The draft code offers invaluable guidance about raising internal audit performance to help businesses and other organisations protect their assets, reputation and sustainability.’

The consultation on the code ends on 11 October.

The IIA consultation on the internal audit code of practice is here: https://www.iia.org.uk/iacconsultation

Pat Sweet

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