Integrity, Confidentiality and Professional Behavior of Internal Auditors

Integrity check to The embed of inner(a) Auditors (IIA), The integrity of familiar studyors established trust and frankincense provides the basis for reliance on their judgement. IIA further added that to be integrity, versed examineors * Sh every last(predicate) perform their tempt with h istly, diligence, and responsibility. * Shall observe the integrity and make disclosures judge by the law and the work. * Shall not knowingly be a party to whatever illegal drill, or engage in acts that be discreditable to the transaction * Shall watch over and contribute to the legitimate and honourable bearings of the organization. consort to the 2009 Global Integrity quite a little conducted by Compliance Week and Integrity Interactive, polled more than 150 morality and compliance executives at global companies worldwide. The survey shown that nearly two-third (64 percent) of respondents use luck assessment specifically to review their integrity risks and to modify their p rograms as necessary. It in like manner shown that 57 percent said their essential attendees soak up periodically audit their integrity programs and functions.Besides that, the survey shown that nearly 80 percent of respondents commented they use the cozy audit function to some extent. Melissa Klein Aguilar (2009) further added that inner audit departments play an important role in ensuring the forcefulness of the comp whatevers integrity function. IIA do also provide a guidance says that internecine auditors should evaluate the design, implementation, and effectiveness of the organizations ethics-related objectives, programs, and activities. Confidentiality According to Institute of inherent Auditors (IIA), confidentiality is one of the four principles that upcountry auditors are expected to apply and uphold. IIA further explain that low confidentialitys principle, ingrained auditors respect the value and ownership of teaching they receive and do not reveal teaching without appropriate authority unless t present is a legal or professional obligation to do so.IIA had also outlined the rules of conduct for confidentiality, in which internal auditors * Shall be prudent in the use and protection of information acquired in the course of their duties. * Shall not use information for any private win or in any manner that would be turnaround to the law or detrimental to the legitimate and ethical objectives of the organization. Office of knowledgeable Audit of Wayne State University further elaborates the rules of conduct that internal auditors are expected to follow in compliance with confidentialitys principle.It stated that internal auditors shall * Not inscribe in any activity or relationship that whitethorn muck up or be presumed to impair their unbiased assessment. This participation includes those activities or relationships that may be in conflict with the interest of the organization. * Not undertake anything that may impair or be pres umed to impair their professional judgment. * Disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review. Be prudent in the use and protection of information acquired in the course of their duties. * Not use information for any personal gain or in any manner that would be contrary to the law or detrimental to the legitimate and ethical objectives of the organization. According to Chartered Institute of Internal Auditors, this principle is pertinent to internal auditors as they have rise to power to a wide range of information and the employing organization needs to be assured that accessed information exit be treated confidentially.Internal auditors also join forces information through interviews, and interviewees need to feel assured that the information provided impart be treated appropriately. Numerous corporate fraud cases happen in recent century such as Enron and WorldCom have triggered not still extensive academ ic whistleblowing studies, but also have caused legal ramifications that have led to the passage of Sarbanes-Oxley flake in 2002 (Eaton & Akers, 2007 Lacavo & Ripley, 2003). Before this, there are limited studies that have used internal auditors as field of honors.This could be because to the descent that the reporting make by internal auditors on corporate wrongdoings is not an act of whistleblowing, but is the role on internal auditor deep down the ambit of their profession (Jubb, 2000). Xu and Ziegenfuss counter- fence in that what Cynthia Cooper (an internal auditor) did in the WorldCom was considered as whistleblowing, this shown that overt may perceive that the internal auditor as a whistleblower. another(prenominal) possibility is because of misperception that whistleblowing only relates to reporting parties outside of the organization (Keenan & Krueger, 1992).According to Eaton & Akers, 2007 Figg, 2000 Keenan & Krueger, 1992 Near & Miceli, 2008, whistleblowing hindqua rters in fact occur internally or outerly. Near and Miceli (1995) argue that internal auditors have higher credibility and power as whistleblower than other organizational members as they are more likely to lick management to terminate wrongdoing. According to The Global Economic Crime raft conducted by PricewaterhouseCooper (PricewaterhouseCoopers, 2009), internal auditing profession is indeed an important role in organizations as most frauds were detected by internal audit.It was supported by Miceli et al. (2008) states compared to other professions, the highest reported observation of wrongdoing was reported by internal auditors. Because of the nature of their works, internal auditors have directly or indirectly seen or confronted many opportunities for corporate wrongdoing and unethical acts to occurs, and the responsibility of disclosure of any wrongdoing is embedded in their job description (Near & Miceli, 1985). Another issue is on whether or not internal auditors should w histleblow when they discover organizational wrongdoings.Internal auditors of all time face situations that involve conflict of interest while executing their dual-role duties (Armold & Ponemon, 1991 E. Z. Taylor & Curtis, 2010). The dual-role duties mentioned here are the role of internal auditors as employed by the organization, which subject to the needs and requirements of their employment, and the role as members of a professional body, they are required to adhere to the professions ethical requirements.Ahmad and Taylor support the view and assert that the role of internal auditors in providing auditing tasks for their organizational may cause ongoing conflicts. Zhang, Chiu and Wei (2009) argue that the disclosing insider information to outsiders breaches obligation to the organization, violates the written or unspoken contract, and elicits damaging unexclusiveity. However, ethically, internal whistleblowing, as opposed to external whistleblowing, is preferred.This is due to dangerous damage caused by external whistleblowing as compared to internal whistleblowing (Park & Blenkinsopp, 2009). In order to avoid the severe damages caused by whistleblowing, Vinten (1996) has suggested that an organization may minimize the risk by internalizing the whistleblowing procedure as part of the corporate communications. By having a kosher whistleblowing procedure, organizations stand to benefit from actions of whistleblowers that may cause further substantial indecorous consequences such as loss of sales, costly lawsuits and negative publicity.professional person Behaviour The oecumenic public demand professional accountants maintain a high ethical standard in order to maintain public confidence in the accountancy profession (Gordon Kiernander, 2009). The ethical principles that guide the work of auditors are listed as follows * Integrity * Objectivity * Professional Competence and Due Care * Confidentiality * Professional Behavior (Farid Kerimov, 2011)Then, the professional behavior has been defined as high expectations for the auditing profession include compliance with laws and regulations and avoidance of any conduct that might establish discredit to auditors work, including actions that would cause an objective third party with knowledge of the germane(predicate) information to conclude that the auditors work was professionally deficient. Professional behavior includes auditors displace forth an honest effort in performance of their duties and professional work in accordance with the germane(predicate) technical and professional standards (Government Auditing Standards, 2010).The main objective of an auditor is to purvey services at the highest standards of performance to satisfy public interest (Michael C. Knapp, 2009). However, frequently, users dont have the needful ability to cherish if the services offered by the auditor are or are not in accordance qualitatively with their requests, reason of which they are forced to accep t till the contrary test that the auditors act in a sufficient and professional way.The guarantee of integrity and professional competency of an auditor hindquarters be assured by the adhesion of them at an ethical economy of the profession to which they belong (R. A. Kishore Nadkarni, 2000). If internal auditors or the internal audit activity is prohibited by law or regulation from conformance with accredited parts of the Standards, conformance with all other parts of the Standards and appropriate disclosures are needed.Then, IIAs planetary Standards for the Professional make of Internal Auditing (Standards) is essential in meeting the responsibilities of internal auditors and the internal audit activity (The Institute of Internal Auditors, 2010). According to IIAs International Standards for the Professional Practice of Internal Auditing (Standards) Internal auditing is conducted in diverse legal and cultural environments within organizations that vary in purpose, size, comp lexity, and structure and by persons within or outside the organization.While differences may preserve the practice of internal auditing in each environment, conformance with The IIAs International Standards for the Professional Practice of Internal Auditing (Standards) is essential in meeting the responsibilities of internal auditors and the internal audit activity (The Institute of Internal Auditors, 2010). Standards for the Professional Practice of Internal Auditing differentiate among the varied responsibilities of the entity, the internal audit department, the director of internal auditing, and internal auditors.The responsibilities as a consultant or internal auditor are listed as follows I. Internal auditors should be independent of the activities they audit. II. Internal audits should be performed with proficiency and due professional care. III. The scope of internal auditing should encompass the test and evaluation of the adequacy and effectiveness of the organizations sy stem of internal control and the quality of performance in carrying out assigned responsibilities. IV.Audit work should include planning the audit, examining and evaluating information, communication results, and follow up. V. The Director of Internal Auditing Should right on Manage the Internal Audit Department. (IIA Standards, 2010) The Public Interest Disclosure affect 1998 (the Act) amended the Employment Rights Act 1996 and created a right to redress, enforceable by tribunal, in the particular of unfair discrimination or dismissal by ones employer as a result of whistleblowing making a disclosure in the public interest.The Act sets conditions as to the subject military issue of the disclosure, the motivation and beliefs of the worker, and the person(s) to whom the disclosure is made (Public Interest Disclosure Act 1998). According to Public Interest Disclosure Act 1998, the purposes of the act are I. It aims to back up prevent such disasters and corporate malpractice in g eneral by promote workers with relevant information to come forward responsibly. II.The Act seeks to achieve this by offering a right to redress in the event of development if workers raise their concerns in the ways specified in the legislation. III. It is also hoped that the Act will promote a change in culture amongst employers, and advertize them to establish procedures to receive disclosures in good faith and act on them appropriately. The scope of the Act includes disclosures which, in the reasonable belief of the worker, show one or more of the following, taking place either in the past, the present, or likely to take place in the future * A criminal offense Breach of a legal obligation (regulatory, administrative, contract law or common law) * Miscarriage of justice (for which the appropriate prescribed person in England and Wales is the Chief Executive of the Criminal Cases Review Commission) * Danger to health and recourse (for which the appropriate prescribed person is the Health and Safety Executive, or the relevant local authority) * Damage to the environment (for which the appropriate prescribed person in England and Wales is the Environment Agency) or * Attempts to cover up such malpractice.Apart from that, whistleblowers making an external disclosure to a prescribed person, instead of to their employer or via internal procedures, will be entitled to redress under the Act in the event that they suffer unfair discrimination or dismissal provided they * make the disclosure in good faith * reasonably believe that the information, and any allegation it contains, are substantially true and * reasonably believe that the matter move within the description of matters for which the person is prescribed.