Chartered IIA to launch new Internal Audit Code to improve corporate governance

The Chartered Institute of Internal Auditors (Chartered IIA) has announced an overhaul of its two Codes of Practice (for financial services and non-financial services), that aims to deliver a stronger internal audit profession to support efforts to improve audit and corporate governance.

A draft version of a new combined Internal Audit Code of Practice has been published and will form the basis of an eight-week public consultation.

The new Code aims to build on the success of the existing Codes in raising the bar by further boosting the status, standards, scope, and skills of internal audit functions.

The Code has also been updated to align with the new Global Internal Audit Standards and the revised UK Corporate Governance Code, as well as to reflect evolving industry practices.

One of the “most significant” changes is the proposal to publish a single Code of Practice, instead of publishing separate Codes of Practice for financial services and non-financial services.

However, the new combined Code of Practice will still preserve the “more stringent” regulatory requirements that apply to internal auditors in the financial services sector. The aim is to raise the bar across the whole internal audit profession and put both financial services and non-financial services internal audit functions on a “more equal footing”.

The revision of the Internal Audit Code of Practice is being led by an independent committee of senior audit industry leaders with the involvement of senior figures from key regulators.

The Committee is chaired by Sally Clark who is the Audit Committee chair of Citigroup Global Markets Ltd as well as a non-executive director on several boards including A.I.B (UK) Plc and Bupa. Representatives from the Bank of England, Central Bank of Ireland, Financial Conduct Authority, and Financial Reporting Council are also attending the committee meetings as observers.

It is expected that the final version of the revamped Internal Audit Code of Practice will be published by September 2024, in time for the new Global Internal Audit Standards and the revised UK Corporate Governance Code which both come into effect on the 1 January 2025.

Clark said: “The combined Internal Audit Code of Practice aims to stretch and strengthen internal audit functions to aid efforts to improve corporate governance. Whether it’s supporting greater financial resilience, assessing corporate culture, or keeping companies honest on their ESG commitments, the internal audit profession needs to be bold and courageous to remain relevant and deliver value. Through this Code, we want to empower internal audits to have a key voice and opinion as it helps to protect the assets, reputation, and sustainability of our organisations.”

Anne Kiem OBE, chief executive of the Chartered IIA, added: “We have seen too many incidents of the impact of insufficient attention to audit and corporate governance that sadly can lead to corporate collapse. It is crystal clear that strengthening audit and assurance is now vital.

“Our new Code addresses this by advocating for robust, competent, and appropriately resourced internal audit functions. Our Code is a practical guide for how internal audit can raise the bar and how organisations can make the best use of their internal audit function. We need a dynamic and forward-looking internal audit profession that supports boards in navigating an increasingly complex and multifaceted risk landscape.”