Mandatory QAR Standards: Is Your Organization Ready?

The IIA's new  Standards for the Professional Practice of Internal Auditing (Standards)  state in the 1300 series that internal auditing functions should have both internal and external quality assessments.  This is a fundamental change in our profession — until now, external quality assurance reviews were suggested in IIA guidelines but were not mandatory.  Many internal auditing departments chose not to have external quality assurance reviews at all or did not have reviews on a regular basis, but effective January 1, 2002, external quality assurance reviews will be required at least once every five years.

WHY ARE REVIEWS CONSIDERED MANDATORY?
All IIA members and certified internal auditors agree to abide by the  Code of Ethics , and the  Code of Ethics  requires internal auditors to perform internal auditing services in accordance with the  Standards .  Therefore, the  Standards  are considered mandatory for the more than 73,000 internal auditors who are CIAs or members of The Institute.  Even for internal auditors who are not members of The Institute, use of the  Standards  is often considered mandatory.  Many internal auditing functions are required by their charters to provide services in accordance with the  Standards , and compliance with the  Standards  is written into legislation or regulation in some areas.  All internal auditors, whether or not they are members of The Institute, are highly encouraged to adopt the  Code of Ethics  and the  Standards .  The need for quality assurance reviews is also recognized in other standards used by internal auditors, including government auditing standards and standards developed for certified public accountants and chartered accountants in many countries.  

For these and other reasons, many leading internal audit professionals consider external reviews essential for compliance with professional standards — and, more importantly, essential for ensuring the quality of internal auditing services.  Quality assurance and improvement programs can lead to improved effectiveness and efficiency in internal auditing, can provide a road map for improvements in the internal auditing function, can assess compliance with standards and policies, and can help internal auditors to add value to their organizations.

GETTING STARTED
The number of quality assurance assessments is expected to rise rapidly over the next few years.  For organizations that have not gone through the external quality assurance process in the past, though, it may be difficult to know just how to get started.  The following steps can help you to get started relatively painlessly.

1. Read the new  Standards  and the  Code of Ethics , and think about them in light of your organization.  Are any immediate changes needed?  An advance review of the new  Standards  can help you get started with improvements even before your review team arrives.  Pay special attention to the standards about quality assurance and improvement. 
   
2. Review the Practice Advisories, especially advisories related to quality assurance.  The Practice Advisories are available to IIA members at no cost, in the Guidance section of The IIA's Web site, at http://www.theiia.org/ .  Several new Practice Advisories related to quality assurance and improvement are scheduled for release during the third quarter of 2001. 
   
3. Talk with internal auditors from other organizations about their experiences with quality assurance reviews.  IIA chapter meetings can be a great place to receive first-hand information about how the review process might work. 
   
4. Contact organizations that might be willing to perform your quality assurance review.  Consider several types of reviews, including quality assurance reviews provided by The Institute, reviews provided by accounting firms and other consultants. Most of these groups are willing to provide a free proposal that describes their review processes in detail. 
   
5. Consider purchasing a quality assurance review manual or sending a staff member to attend a course on quality assurance reviews.  Review manuals and training courses offer step-by-step instructions on all aspects of quality assurance reviews, from planning the review to what happens after the review.
    
6. For even more in-depth training on review processes, consider volunteering to serve on a quality assurance review team.  Volunteers on IIA review teams and review teams of several other organizations gain first-hand experience of the review process.  They also have unique opportunities to see how the internal auditing process works at other organizations, and expenses are generally paid by the organization receiving the review. 
   
7. The most important thing is to get started soon.  Demand for quality assurance reviews is expected to rise rapidly over the next two years.  Prices may rise because of the increase in demand, and organizations that delay getting started may find that external review teams are unavailable on preferred dates.  By scheduling your review early, you can lock in preferred dates and pricing.  Even if your preferred review dates are not until next year, it is not too early to schedule your review.  

After their first external quality assurance review, many audit executives state that they wish they had arranged for a review to be performed at a much earlier date.  The intention of reviewers is to help you improve operations and provide additional value to your organization.  By getting a complete, objective review of your internal auditing function, you will be on the road to providing world-class internal auditing services. 

 

 

Quality Assurance Review (QAR)