Internal Auditors Give Themselves High Marks in Ethics

Jan 7th 2016
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Internal auditors throughout the world rate themselves highly in professional ethics but far lower in technical skills, with North American practitioners ranking second to Europeans in all categories.

The results were published in the Institute of Internal Auditors' (IIA) Common Body of Knowledge (CBOK) 2015 Global Practitioner Survey, Mapping Your Career, Competencies Necessary for Internal Audit Excellence.

The findings are based on more than 14,000 respondents in 166 countries, 39 percent of whom were chief audit executives (CAEs) and directors, 17 percent were managers, and 44 percent were staff employees.

“In light of the number of high-profile corporate scandals around the globe in the past year, such as FIFA, Toshiba, and Volkswagen, it is heartening to see that internal auditors rate themselves highest in professional ethics,” IIA Global Board Chairman Larry Harrington said in a prepared statement. “However, having important competencies related to technical skills rate at the bottom is surprising and somewhat alarming. Internal audit practitioners individually must invest in themselves and take steps to improve those competencies.”

The most sought skill? The majority (64 percent) of CAEs put critical thinking among the top five skills they seek in recruits – and overall it was the most desired skill worldwide. But critical thinking is largely learned on the job, the report states.

The CBOK survey examines how internal auditors rate themselves according to the 10 core competencies in the IIA's Global Internal Audit Competency Framework. The competencies are divided into four categories: foundational skills, technical expertise, personal skills, and internal audit delivery.

But despite auditors' overall high ranking in professional ethics, the survey revealed a need for improvement in certain areas. For example, the survey report notes that 73 percent and 72 percent of respondents rate themselves as advanced or expert in ethics' competencies of maintaining confidentiality and objectivity. But in incorporating ethics and fraud into audit engagements, professionals confident in performing advanced and complex tasks dropped to 64 percent and 60 percent, respectively. And slightly more than 10 percent indicated they need supervision for routine tasks in those two skills.

“Ethics and fraud should be on the radar for every audit engagement – and certainly a clear understanding of the Code of Ethics – so this is an area where internal auditors and their managers may want to focus additional training,” the report states.

Further, rankings for internal audit management were in the mid-range. “If you are a CAE or a manager, your performance in this area is critical for the overall success of the internal audit department,” the report states.

At the other end of the scale, knowledge of the IIA's International Professional Practices Framework (IPPF), which prescribes the International Standards for the Professional Practice of Internal Auditing, ranked the lowest of all competencies.

“According to several CAEs who were interviewed, practitioners may not think about the standards directly when they do their work but instead follow department operating manuals, which are grounded in IPPF concepts,” the report states.

In addition, the IPPF skill of maintaining a quality assurance and improvement program was the lowest rated of all skills – 35 percent of respondents rated themselves as advanced or expert.

Technical competencies also include business acumen or judgment and knowledge of governance, risk, and control. Lower rankings may be the result of the “changing nature of the business environment and the need for these knowledge areas to be continually refreshed,” the report states. But only about half (53 percent) of CAEs responded that their training includes business knowledge related to the organization.

Here's a look at the findings for European and North American internal auditors, as well as the global averages, in the 10 competencies.

  Europe North America Global
Professional ethics 4.26 4.20 3.94
Communication 4.14 4.04 3.84
Persuasion and collaboration 4.05 4.00 3.80
Internal audit delivery 4.10 3.94 3.79
Critical thinking 3.89 3.73 3.62
Internal audit management 3.85 3.73 3.58
Improvement and innovation 3.83 3.71 3.57
Business acumen 3.84 3.64 3.50
Governance, risk, and control 3.75 3.53 3.43
IPPF 3.46 3.27 3.15

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