Local Authority Internal Audit Virtual Forum

Institute welcome | Anne Kiem, CEO, Chartered IIA UK and Ireland

For more than a generation, the IPPF from The Institute of Internal Auditors (IIA) have guided practitioners in providing internal audit assurance and advice that is independent, objective, effective, efficient, ethical, and of the highest quality.

During that time the fundamentals of risk management – identifying relevant risks to organizational goals and strategies, assessing likelihood and impact, establishing a risk appetite, and creating internal controls to manage risks — have remained consistent.

However, the speed at which risks emerge, factors that add volatility and complexity to risk, and evolving attitudes about the purpose and nature of organizations have created new challenges and demands for today’s internal auditors.

The future demands internal audit services that are timely, relevant, and impactful. This requires standards that are insightful, prescient, clear and direct. To meet that demand, The IIA will soon release a public comment draft that dramatically changes how the Standards and other elements of the IPPF are presented and explained. The new Global Internal Audit Standards™ more clearly articulate the keys to effective internal auditing by grouping the Standards into five domains.

Today Liz Sandwith, Special Advisor, International Internal Audit Standards Board (IIASB) and Chief Professional Practices Advisor, Chartered Institute will share this journey and what you as internal auditors should be preparing for. 

Chair opening comments | Piyush Fatania, Head of Audit, Risk, Assurance and Insurance at Gloucestershire County Council and Chartered IIA Council member

The IIA’s new draft Global Internal Audit Standards™ update the International Standards for the Professional Practice of Internal Auditing and for the first time highlight the public sector’s unique characteristics, such as its purpose and governance structure, which distinguish it from the private sector and affects how the internal audit function does its work.

The new draft Standards include the definition of public sector as well as 19 public sector references in the Considerations for Implementation sections to assist internal auditors in the public sector in performing assurance and advisory services.

The consultation feedback showed only low levels of disagreement with the new standards. The most frequently recurring comments of concern included:

• An increased usage of the word “must,” making the Standards seem too prescriptive.
• Unclear requirements for external quality assessments.
• The applicability of the Standards to public sector and small internal audit functions.
• Missing or vague terminology in the Purpose of Internal Auditing.
• Requirements for 20 hours of continuing professional education and specific competencies for all internal auditors.
• Requirements for board actions stated too directly and missing responsibilities for senior management.
• Unclear distinction between internal audit mandate and the internal audit charter.
• Confusion about appropriate measures of internal audit performance.
• The applicability of requirements to both assurance engagements and advisory engagements.
• Requirement for internal auditors to make recommendations related to findings.
• Perceived requirement of “ratings” and “rankings” for findings and conclusions.
• Requirement for a statement of conformance or nonconformance in final engagement communications.

As new risk challenges ratchet up the pressure to create, maintain, and assure effective governance, internal audit standards that place a premium on effective, high-quality risk assurance and advisory services will be critical.

CAEs and boards should be asking, “Is our organization equipped for the future from a risk management and internal control perspective?”

The Global Internal Audit Standards are designed to help organizations answer, “Yes.”

As well as providing individual input to the consultation survey LACAN also sent a letter to Global IIA highlighting some of their concerns.

Chair closing comments

The numbers in attendance today (over 90 members) reflects the importance of this topic. Listening to the session raises many questions that we will have to work through in the coming months. The topical requirements have the potential to be very useful with the caveat that they don’t prevent some engagements being undertaken due to the risk of nonconformance. I look forward to seeing the published Standards.

Institute close | Liz Sandwith, Chief Professional Practices Advisor, Chartered IIA

There is some substantial change with the new Standards, a need for engagement with your Audit Committee and senior management and consideration of working practices/methodologies. With any change programme you start to position things and engage as early as possible. Don’t delay preparing for this change.

Our next session is 29 November looking at Digital Services with Capita.

Dates for your diary 

2-3 November: Scotland Conference – Edinburgh book here

13 December: LA Forum, Review of 2023

A spin-off Data Analytics for Local Authorities forum has been set up to address the specific needs of your sector. If you are interested in joining, please email mandy.coleman@iia.org.uk