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INTERNAL AUDIT PROFESSIONIllustrative Solutions4.Foster improved organizational processes and operations.”(Introduction to the Standards)The Attribute Standards address the characteristics of organizations and individuals performing internal audit activities. The Performance Standards describe the nature of internal audit activities andprovide quality criteria against which the performance of these services can be measured.7.In consulting services, the service relationship is generally between users (customers) who have direct involvement in the process, system, or subject matter and the provider (auditor/consultant). In assurance services, there are typically three (or more) parties involved: (1) the auditor, (2) the person or group directly involved with the process, system, or subject matter, and (3) the person or group relying on the auditor’s assessment. As the “contracting” process is more direct in consulting, with the user/customer and provider able to work together to make sure the user’s needs are met by the engagement, less detailed standards are necessary. In assurance services, the user is typically distant from the engagement process and may, in some cases, not even be known. Having established standards allows the needs of all three groups to be balanced. The nature of this three-party relationship also requires the auditor to have control over the engagement as the auditor is responsible for balancing the needs of the other two parties.8.The Glossary to the Standards defines independence and objectivity as follows:Independence— The freedom from conditions that threaten objectivity or the appearance of objectivity. Such threats to objectivity must be managed at the individual auditor, engagement, functional, and organizational levels.Objectivity— An unbiased mental attitude that allows internal auditors to perform engagements in such a manner that they have an honest belief in their work product and that no significant quality compromises are made. Objectivity requires internal auditors not to subordinate their judgment on audit matters to others.It is important to note that independence and objectivity are two distinct, yet interrelated, concepts that are fundamental to providing value-adding internal audit services — the internal audit function must be independent and individual internal auditors must be objective. Whereas independence is an attribute of the internal audit function, objectivity is an attribute of the individual auditor.9.A conflict of interest is “a situation in which an internal auditor, who is in a position of trust, has a competing professional or personal interest” (Interpretation of Standard 1120: Individual Objectivity).Circumstances that cause conflicts of interest for an internal auditor include, for example:Auditing the area of the organization for which he or she was recently responsible.
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internal auditor, The Institute of Internal Auditors