PRACTICE ADVISORY (PA) UPDATE

Guidance for Implementing Mandatory External Quality Assurance Review Requirements
The new Standards  require that internal audit shops have a quality improvement and assessment program. In the past, internal auditors had a single-sentence standard related to internal audit quality assurance. But the new Standards for the Professional Practice of Internal Auditing  include seven distinct standards related to quality assurance and improvement programs. And while the new standards are designed to help ensure audit quality, until now internal auditors haven't had much guidance available to help them interpret or apply the new quality standards. On December 19, 2001, The Institute released four new Practice Advisories (1310-1, 1311-1, 1312-1, and 1330-1) to help organizations implement the new Standards relating to both internal and external quality assurance programs.

Practice Advisory 1310-1, Quality Program Assessments, gives suggestions and general information for internal auditors implementing and assessing quality programs within the internal audit activity. Practice Advisory 1311-1, Internal Assessments, includes suggestions for performing both periodic internal reviews and ongoing internal reviews of internal auditing performance. Practice Advisory 1312-1, External Assessments, gives suggestions for planning and contracting for an external assessment of the internal audit activity, and Practice Advisory 1330-1, Use of "Conducted in Accordance with the Standards ," gives advice on when it is appropriate to state that an internal audit has been conducted in accordance with the Standards for the Professional Practice of Internal Auditing .

New Practice Advisory on Consulting
This new PA helps to identify responsibilities and defines due professional care for consulting engagements. It focuses on broad parameters to be considered in formal consulting engagements, addressing issues such as independence, objectivity, scope of work, due professional care, documentation requirements, and follow-up for consulting engagements. It also helps to answer several important questions that many audit executives face when they offer consulting services.

The Practice Advisory 1000.C1-2 counsels that internal auditors should include reports of the nature, extent, and overall results of formal consulting engagements, along with other routine reporting of auditing activities, to management, the audit committee, board, or other governing body of the organization. Internal auditors need to keep executive management and the audit committee informed about how audit resources are being deployed. Detailed reports or specific results and recommendations are not required, but appropriate descriptions of engagements and activities should be communicated. Such reporting is essential in satisfying our responsibility to comply with Standard 2060, Reporting to the Board and Senior Management.

The advisory is also noteworthy because it helps to establish specific actions that should be taken to demonstrate due professional care.

QUALITY ASSURANCE REVIEWS (QAR) NOW MANDATORY

The IIA's new  Standards  (Effective January 1, 2002) place considerable emphasis on quality assurance and related processes of assessment. Standard 1312 requires every internal audit department to have an external quality assurance assessment at least once every five years by a qualified independent reviewer from outside the organization (who has knowledge of the Standards ).

Organizations that have never had an external assessment are encouraged to do so as soon as possible.

The IIA's Quality Auditing Services Department has 15 years experience conducting QARs for organizations of all types and sizes worldwide.

A new Quality Assessment Manual (4 th Edition) written by The IIA, is based on the new  Standards . IIA teams are already using the new manual during QARs .

No matter what industry, IIA Inc. have experts to evaluate your company's internal audit staff's compliance with The IIA's Standards  (as well as government auditing standards and various regulations), recommend changes to policies and procedures, improve the way your staff functions, and offer comments on "best practices."

The IIA's objectives while performing a QAR are to measure the internal auditing department's compliance with the Standards , to approve the efficiency and effectiveness of the department, and to offer advice about utilization of best practices.

Make sure your organization is in compliance with the Standards  by learning more  about QARs today.

 

Quality Assurance Review (QAR)