Integrity, Confidentiality and Professional Behavior of Internal Auditors

Integrity harmonize to The Institute of familiar canvassors (IIA), The integrity of natural studyors established trust and thus provides the basis for reliance on their judgement. IIA get on added that to be integrity, intrinsic auditors * Shall perform their work with h peerlessstly, diligence, and responsibility. * Shall observe the right and make disclosures expected by the law and the work. * Shall not knowingly be a party to whatever illegal work outivity, or engage in acts that are discreditable to the profession * Shall complaisance and contribute to the legitimate and ethical intentions of the constitution.According to the 2009 Global Integrity gaze giveed by Compliance Week and Integrity Interactive, polled more than 150 ethics and compliance executives at orbicular companies worldwide. The panorama shown that nearly two-third (64 percent) of respondents use risk assessment specifically to review their integrity risks and to modify their programs as necessar y. It too shown that 57 percent said their internal auditors have periodically audit their integrity programs and functions.Besides that, the survey shown that nearly 80 percent of respondents commented they use the internal audit function to some extent. Melissa Klein Aguilar (2009) get ahead added that internal audit departments play an important use of goods and run in ensuring the effectiveness of the companys integrity function. IIA do also issue a guidance says that internal auditors should evaluate the design, implementation, and effectiveness of the organizations ethics-related objectives, programs, and activities. Confidentiality According to Institute of intimate Auditors (IIA), confidentiality is one of the four principles that internal auditors are expected to apply and uphold. IIA further explain that under confidentialitys principle, internal auditors respect the value and ownership of information they receive and do not disclose information without appropriate l eave unless there is a legal or passkey obligation to do so.IIA had also outlined the rules of conduct for confidentiality, in which internal auditors * Shall be heady in the use and protection of information acquired in the die hard of their duties. * Shall not use information for any personal gain or in any room that would be contrary to the law or detrimental to the legitimate and ethical objectives of the organization. Office of home(a) Audit of Wayne State University further elaborates the rules of conduct that internal auditors are expected to follow in compliance with confidentialitys principle.It give tongue to that internal auditors shall * Not participate in any activity or relationship that may impair or be presumed to impair their unbiased assessment. This participation includes those activities or relationships that may be in skirmish with the interest of the organization. * Not accept anything that may impair or be presumed to impair their professional judgment . * bring on all material facts known to them that, if not disclosed, may distort the inform 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 access to a wide range of information and the employing organization needinesss to be assured that accessed information will be treated confidentially.Internal auditors also gather information through interviews, and interviewees need to feel assured that the information provided will be treated appropriately. Numerous corporate fraud cases put across in recent century such as Enron and WorldCom have triggered not only extensive academician whistleblowing studies, but also have caused legal ramifications that have led to the passage of Sarbanes-Oxley make out in 2002 (Eaton & Akers, 2007 Lacavo & Ripley, 2003). originally this, there are limited studies that have used internal auditors as subjects.This could be because to the argument that the report make by internal auditors on corporate erroneousnesss is not an act of whistleblowing, but is the role on internal auditor at heart the ambit of their profession (Jubb, 2000). Xu and Ziegenfuss counter-argue that what Cynthia Cooper (an internal auditor) did in the WorldCom was considered as whistleblowing, this shown that reality may perceive that the internal auditor as a whistleblower. Another 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 tight fitting & Miceli, 2008, whistleblowing can in fact occur internally or externally. Near and Miceli ( 1995) argue that internal auditors have higher credibility and power as whistleblower than other organisational members as they are more likely to influence management to terminate wrongdoing. According to The Global economical Crime Survey 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 whistleblow when they dis apprehend organisational wro ngdoings.Internal auditors always 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 wordless contract, and elicits damaging publicity. However, ethically, internal whistleblowing, as opposed to external whistleblowing, is preferred.This is due to severe 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 proper whistleblowing procedure, organizations stand to benefit from actions of whistleblowers that may cause further substantial adverse consequences such as loss of sales, costly lawsuits and negative publicity. passkey Behaviour The general public demand professional accountants maintain a high ethical standard in order to maintain public confidence in the account 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 look has been defined as high expectations for the auditing profession include compliance with laws and regulations and avoidance of any conduct that might bring discredit to auditors work, including actions that would cause an objective third party with knowledge of the pertinent information to conclude that the auditors work was professionally deficient. Professional behavior includes auditors putting forth an honest effort in functioning of their duties and professional services in consonance with the relevant 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 appreciate if the services offered by the auditor are or are not in accordance qualitatively with their requests, intellect of which they are forced to accept till the contrary test that the auditors act in a fit and professional way.The guarantee of integrity and professional competency of an auditor can be assured by the adhesion of them at an ethical code 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 conformity with certain parts of the Standards, conformance with all other parts of the Standards and appropriate disclosures are needed.Then, 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). According to IIAs International Standards for the Professional Practice of Internal Auditing (Standards) Internal auditing is conducted in diverse legal and heathen environments within organizations that vary in purpose, size, complexity, and structure and by persons within or outside the organization.While differences may collide with 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 autonomous 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 examination and valuation of the adequacy and effectiveness of the organizations system of internal control and the quality of performance in carrying out assigned responsibilities. IV.Audit work s hould include planning the audit, examining and evaluating information, communication results, and follow up. V. The Director of Internal Auditing Should decently Manage the Internal Audit Department. (IIA Standards, 2010) The Public Interest revelation Act 1998 (the Act) amended the Employment Rights Act 1996 and created a right to redress, enforceable by tribunal, in the event of below the belt discrimination or inflammation by ones employer as a result of whistleblowing making a disclosure in the public interest.The Act sets conditions as to the subject matter 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 help proscribe such disasters and corporate malpractice in general by encouraging workers with relevant information to come off responsibly. II.The Act seeks to achieve this by off ering a right to redress in the event of victimisation 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 encourage 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 tense * A crime Breach of a legal obligation (regulatory, administrative, contract law or frequent law) * Miscarriage of justice (for which the appropriate prescribed person in England and Wales is the Chief Executive of the Criminal Cases check up on Commission) * Danger to health and safety (for which the appropriate prescribed person is the Health and Safety Executive, or the relevant local authority) * Damage to the environment (for which the appropri ate 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 cogitate that the information, and any allegation it contains, are substantially true and * reasonably believe that the matter falls within the description of matters for which the person is prescribed.