Internal audit’s independence and objectivity should be explicit in UK Corporate Governance Code

27 February 2018

The Chartered Institute of Internal Auditors has called for internal audit to be accountable to UK professional and regulatory requirements in the Financial Reporting Council’s proposed revisions to the Corporate Governance Code.

The Chartered IIA today submitted a response to the Financial Reporting Council’s (FRC) consultation on the Code revisions.

Chief Executive Dr Ian Peters MBE said he was pleased to submit the response which represented the views of Chartered IIA members, and to contribute to the wider review as part of the FRC’s stakeholder advisory panel.

“It is critical we have a corporate governance framework in place that reflects our current environment.

“It has become clear that, in the context of very public corporate failures like Carillion, the role of internal audit needs to be scrutinised and held to the highest standards.

“We have suggested that the Corporate Governance Code explicitly requires regular monitoring and reviewing of the independence and objectivity of internal audit, and that relevant UK professional and regulatory requirements are taken into account.”

According to the Chartered Institute of Internal Auditors, the primary role of internal audit should be to help the board and executive management to protect the assets, reputation and sustainability of the organisation.

Professional standards for internal auditors include the IIA’s global standards for internal auditors and the Chartered IIA’s Guidance on Effective Internal Audit in the Financial Services Sector, informally known as the Financial Services Code.

“Following the success of the Financial Services Code, we will also be working this year on producing a Code of Practice for other sectors, which sets out the role, scope and priorities of internal audit,” Dr Peters said.

The Chartered IIA held seminars across the country and received feedback from the private sector (including many listed companies), as well as the public sector, to inform its submission to the FRC.

Established in 1948, the Chartered Institute of Internal Auditors is the leading professional body for internal auditors in the UK and Ireland, and has almost 10,000 members in all sectors of the economy.