The internal audit code of ethics plays a crucial role in ensuring the smoothness and accuracy of the process internal audit.
Without the implementation of a strict code of ethics, auditors can make mistakes that risk producing inaccurate audit reports.
Such reports can not only mislead management in strategic decision-making, but also undermine the trust of the company's management in auditors.
In this article, we will review the main principles that auditors are obliged to uphold when performing their duties.
What is the Internal Audit Code of ethics?
The internal audit code of ethics is a set of principles designed to ensure that auditors carry out their duties in accordance with applicable rules.
This principle must be adhered to so that the audit process can run correctly and produce good reports.
As for some of the functions of this code of ethics include:
- Maintaining stakeholder trust: The code of ethics helps ensure that auditors work honestly and transparently, so that the resulting audit results can be trusted.
- Preventing conflicts of interest: By applying the principles of the code of ethics, auditors are expected to maintain independence and avoid situations that have the potential to cause bias.
- Protecting the organization's reputation: The code of ethics supports auditors in ensuring that the organization's activities remain in compliance with applicable regulations and policies.
- Increase the professionalism of auditors: Through compliance with the code of ethics, auditors are invited to continue to learn and develop their abilities so that the quality of work increases.
4 Internal Audit Code Of Ethics
A. General Principles
After understanding the definition and function of the internal audit code of ethics, it is time to get to know the main principles of the internal audit code of ethics that must be obeyed:
1. Integrity
Integrity is the main principle that must be held by an auditor. By upholding honesty, auditors must provide assessments that truly reflect real conditions.
This is important to ensure that the results of the assessment can be trusted by stakeholders.
2. Objectivity
The second principle in the code of ethics is objectivity, that is, it emphasizes the importance of maintaining the independence of thoughts and actions for internal auditors.
In practice, auditors must ensure that the evaluation process is not influenced by particular interests, so that every aspect is assessed equally and fairly.
From the collection of information, to the evaluation, to the communication of results related to the investigated activity, everything must be done objectively and free from partiality.
3. Confidentiality
The internal audit process involves confidential company data such as financial statements, business strategies, employee data, and operational information.
The internal audit code of ethics requires auditors not to disclose such information to anyone unless there is a legal and professional authority.
4. Competence
The last principle is competence, emphasizing the importance of auditor. to apply relevant skills, insights, and experience in each internal audit process.
Not only that, auditors are also expected to continue to improve competence through training and further education to maintain the quality of audit results in accordance with the development of Professional Standards.
B. Rules Of Conduct
To ensure that the principles in the code of ethics are complied with, there are several rules of conduct that must be used as a reference for auditors when carrying out their duties, namely;
1. Integrity
- Good communication and interpersonal skills
- Obey the law
- Be careful
- Respect for organizational goals
- Not involved in illegal activities
- Adhere to the rules of the profession
2. Objectivity
- Do not engage in relationships that create bias.
- Do not accept anything that affects the decision
- Inform the facts without anyone covered
- Uphold justice when judging
3. Confidentiality
- Maintain and use information carefully
- Not suitable for carrying out tasks
- Not illegally misusing information
4. Competence
- Serving according to insight, skills, and experience
- Provide audit services in accordance with the standards of professional practice of internal audit
- Maintain and improve the standard of professional practice continuously
Originator Of Internal Audit Code Of Ethics
The Internal Audit Code of Ethics was created by the Institute of Internal Auditors (IIA), an international organization founded in 1941.
IIA aims to develop and promote the internal audit profession through standard, training, and certification.
Salah satu kontribusi terbesar IIA adalah menetapkan Kode Etik dan Standar Internasional untuk Praktik Profesional Audit Internal (International Standards for the Professional Practice of Internal Auditing – IPPF).
The internal auditor code of ethics document can be officially obtained through the website of the Institute of Internal Auditors.
However, the code of conduct drafted by the IIA is a global guideline that can be adapted to the local context by various organizations or jurisdictions.
Violation Of The Code Of Ethics Of Internal Auditors
As already explained, this code of conduct is mandatory for all auditors to comply with when performing their duties.
If violated, there is a penalty to the auditor depending on the level of violation, organizational policies, and local legal jurisdiction.
Consequences that may be given to the auditor include:
- Internal Disciplinary Action: The Auditor may receive an official reprimand for the record, even dismissal from the organization.
- Sanctions from professional organizations: For auditors who are members of professional associations, violations of the code of ethics may be subject to sanctions such as revocation of certification, Prohibition of practice, or removal of membership.
- Legal Consequences: If the breach involves an illegal act (such as bribery, data manipulation, or breach of confidentiality), the auditor may face civil or criminal charges.
- Reputation Impact: Auditors found to be in breach of the code of conduct may lose trust and reputation in the industry.
Conclusion
The internal audit code of ethics is an important foundation in ensuring the integrity, objectivity, confidentiality, and competence of auditors during the performance of their duties.
By complying with the code of conduct, auditors can protect the reputation of the organization, prevent conflicts of interest, and produce accurate and reliable audit reports.
Consistent implementation of the internal audit code of ethics not only strengthens the credibility of auditors but also ensures the organization's compliance with regulations and professional standards.
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