Laws and regulations on internal auditing
Article 65 of the Act on Public Finances no. 123/2015 states that internal audits shall be conducted of state entities in Section A on the basis of regulations established by the minister in accordance with international standards published by the Institute of Internal Auditors.
Professional Practices Framework for internal auditing
The Institute of Internal Auditors (www.theiia.org) produces a Professional Practice Framework. Internal auditors are required to comply with the following: the definition of internal auditing, core principles for the professional practice of internal auditing, international standards for internal auditing and the Code of Ethics.
Figure 1.2. Professional Practices Framework for internal auditing
Definition of internal auditing
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
Core Principles for the Professional Practice of Internal Auditing
The Core Principles, taken as a whole, articulate internal audit effectiveness. For an internal audit function to be considered effective, all principles should be present and operating effectively. The Core Principles are that the internal auditor:
- Demonstrates integrity
- Demonstrates competence and due professional care
- Is objective and free from undue influence
- Aligns with the strategies, objectives and risks of the organisation
- Is appropriately positioned and adequately resourced
- Communicates effectively
- Provides risk-based assurance
- Is insightful, proactive, and future-focused
- Promotes organisational improvement
Code of Ethics for Internal Auditors
The Code of Ethics contains the main rules of the profession and internal auditing practices. The Code of Ethics applies equally to internal auditors and the people working under their authority. The main principles from the Code of Ethics for Internal Auditors are: integrity, objectivity, confidentiality and competency.
International Standards for the Professional Practice of Internal Auditing
The international standards are intended to provide a basic framework for the implementation of internal ¬audits. The standards pertain to the organisation and implementation of internal audits, as well as the attributes of individuals working in internal auditing.