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SRC Insights: Second Quarter 2004

Attention: Internal Auditors!

In the Fourth Quarter 2002 issue of SRC Insights, John Shaffer, Senior Vice President and General Auditor at the Federal Reserve Bank of Philadelphia, introduced readers to The Institute of Internal Auditors' (The IIA) Professional Practices Framework. In that article, Mr. Shaffer reviewed the PPF and its major elements—Definition of Internal Auditing, Ethics, Standards, Practice Advisories, and Development and Practice Aids—as approved by The IIA in June 1999.

On January 1, 2004, one of the significant mandatory elements of the PPF, the Standards, was revised. The Standards, which are now officially called the International Standards for the Professional Practice of Internal Auditing, have been updated to reflect current risk management and governance requirements, address consulting opportunities, and cover the release of results to parties outside the organization.

Some of the highlights include:

  • Clarifying the meaning of the word "should," which represents a mandatory obligation when used in the Standards.
  • Clarifying the Standards' applicability to auditors who may be impacted by legal or regulatory issues. The Standards' introduction now states, "If internal auditors are prohibited by laws or regulations from complying with certain parts of the Standards, they should comply with all other parts of the Standards and make appropriate disclosures."
  • Clarifying the differences between assurance and consulting services.
  • Stating that periodic internal and external quality assessments and ongoing internal monitoring should be part of a quality assurance and improvement program to help the internal auditing activity add value and improve the organization's operations.

The new Standards are available on The IIA's website External Link. Reprints of the original article.

The views expressed in this article are those of the author and are not necessarily those of this Reserve Bank or the Federal Reserve System.