A draft of the new standards is about to be published: An overview of the most important changes

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It has now been almost three years since the IIASB acknowledged the need for re-organizing and -presenting the Standards, and thus began to update the internal audit profession’s governing documents. After a throughout revision phase that took into account the input of a broad range of stakeholders, a draft of the new standards is now about to be published for public consultation. In this context the IIA has just released a special edition of “Global Perspectives and Insights” focusing on “Updating Standards for a Changing World”.

In view of the upcoming public consultation, the most significant and obvious change in terms of standards is probably the new structure, which was simplified. The focus of the IPPF six components is now on two areas, namely Standards and Guidance, which are subdivided into five domains each addressing key aspects of the profession.

• Domain I: Purpose of Internal Auditing
• Domain II: Ethics and Professionalism
• Domain III: Governing the Internal Audit Function
• Domain IV: Managing the Internal Audit Function
• Domain V: Performing Internal Audit Services

Additionally the domains incorporate related principles, 15 in total, that drive standards within the domain. These principles contain general descriptions of a basic assumption or rule that serve to summarize a group of requirements and recommendations that follow. In order to facilitate practitioners to understanding and conformance with individual standards, each standard is now additionally followed by recommended practices and evidence of conformance.

To have a better overview of the proposed changes, before and after states are contrasted below:

Before After
Unclear responsibilities of the internal audit function, the chief audit executive (CAE), and the board Domain III describes:

  • The expectations on the board in support of an effective internal audit function, as well as its roles and responsibilities.
  • The role and responsibilities of the CAE.
  • The role of the board to enable the CAE and internal audit function to serve the board and other stakeholders.
Requirements for strategically managing a high-quality internal audit function were not thorough.

 

 Domain IV describes:

  • Requirements and recommended practices for CAEs to develop strategy and performance indicators, in order to lead a quality internal audit function.
Lack of detail in the standards describing how to perform practical aspects of individual internal audit engagements. Domain V describes:

  • Requirements and recommended practices for performing engagements, particularly regarding risk assessment and information analysis to develop findings and conclusions
Difficulty in accessing essential guidance for implementing and demonstrating compliance with standards due to placement in separate documents. The Global Internal Audit Standards comprise one document:

  • To implement and demonstrate conformance to the standards, each standard contains sections on requirements and recommended practices.

The IIA’s Special Issue of Global Perspectives & Insights on updating the Standards can be found here.