These initiatives include the early endorsement of the Institute of Internal Auditors (IIA) Australia Policy Agenda by the private, public, and not-for-profit sectors. Comprising five guiding principles, together with recommendations for establishing a reliable system of risk management monitoring and assurance, the IIA Policy maintains that good governance stems from a strong Audit Committee, robust internal audit function and best practice internal audit professional standards. The then Federal Minister for Finance and Deregulation, Lindsay Tanner commended the IIA for its advocacy of the strong internal audit functions necessary for improving governance. He encouraged organisations in all sectors to assess their strengths and weaknesses according to the benchmarks set out in the Policy.
Vani identifies the lack of qualified professionals as a key factor in ineffective audit functions. We agree that qualified professionals are key to an effective internal audit function. Additionally, the IIA is concerned about the lack of consistency of the core skills of internal auditors. One of our initiatives was the development of an internal auditor competency framework to set a benchmark of the minimum skills required for the role. The competencies focus on technical skills, knowledge areas, interpersonal skills, and the International Professional Practices Framework (IPPF) standards developed by the IIA. In addition, the competencies are described in terms of the behaviours required to perform effectively across four different job levels. These levels are: New Internal Auditor, Practising Internal Auditor, Internal Audit Manager, and Chief Audit Executive. The Competency Framework is available on the IIA’s website.
A third key factor presented is the lack of International Standards. Although the author acknowledges the existence of the IPPF standards, he states they are applicable mainly in the private sector. The IIA, and several large public sector jurisdictions within Australia, could not disagree more, as NSW, WA, and QLD have mandated compulsory compliance with the IPPF standards for their internal audit functions.
Lastly, the IIA has agreed to fund and facilitate an initiative that was introduced by one of our state councils. The NSW Premier & Cabinet Division of Local Government recently introduced Internal Audit Guidelines for agencies under their jurisdiction. The initiative aims to replicate the introduction of such guidelines for local governments in all states, in which they do not exist, in addition to improving those already in existence. The objective of the initiative is to achieve consistency and increased effectiveness for local government internal audit.
Internal auditing is a profession, like many others, that is best served by continuous improvement. The IIA will continue to work with all sectors, including the public sector, to improve the effectiveness of internal audit. We commend the Australian public sector for their participation in this continuous improvement process.
Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.
