1, In June 1999, the Board of Directors of the Institute of Internal Auditors (IIA) adopted the following definition of internal auditing: "Internal auditing is an independent, objective consulting activity used Internal Auditing
to improve the operations of an organization and add value to it. By introducing a systematic and methodical approach to evaluating and improving the effectiveness of risk management, control and corporate governance processes, internal auditing can help an organization achieve its objectives." 2, Internal auditing in China, refers to an evaluation activity carried out by the internal organization or personnel of the audited unit, on the effectiveness of its internal control, the authenticity and integrity of its financial information, as well as the efficiency and effectiveness of its business activities. Internal auditing is one of the three types of auditing alongside government auditing and auditing by certified public accountants.
Difference and connection with the certified public accountants
(a) Connection: CPA audit compared to the **** the same point is that they all start with a financial audit, but the focus of attention is different, based on the expansion of financial auditing business areas are also different. (B) difference: 1, different independence. Internal audit emphasizes the independence of internal audit institutions and auditors and audited departments, does not emphasize the independence of audit institutions and auditors and leaders. Therefore, internal audit is essentially one-way independence. Internal audit is the "external audit" of the counterpart of the title, that is: by the department, the unit set up by the internal full-time institutions and personnel, independently of the department, the unit Internal Audit Business Outline
Bit of the financial revenue and expenditure and related economic activities for the review, to improve the internal control, safeguard the financial and monetary discipline, to improve the management and economic efficiency of the comprehensive economic supervision activities, to enhance economic efficiency. Improvement of economic efficiency and comprehensive economic supervision activities. Internal audit in China's audit organization system, plays an important role in the state audit as the leading, based on the internal audit, supporting the audit work of enterprises. The essence of internal auditing lies in the fact that, as a part of the management function of enterprise commanders, it carries out regular checking, analyzing and evaluating whether the management means of the enterprise are proper or not, whether there are any drawbacks or omissions, and whether they are economical and effective or not. The main defects and characteristics of the internal audit is that, due to the unit under the leadership of the internal audit activities, its independence is slightly weaker; but has the timeliness, continuity, relevance, preventive and other characteristics. 2, the two audit objectives are different. CPA audit objective is the legitimacy of the financial report, fairness to make an evaluation, while the purpose of internal audit is to evaluate and improve the effectiveness of risk management, control and corporate governance processes, to help enterprises to achieve their goals. 3, due to the different audit objectives, so the two focus on different areas of emphasis. Even if the two biggest point of the same financial reports, the focus of the CPA and internal audit is also different. The main focus of the CPA audit is the quality of accounting information and compliance, that is, the legitimacy of the financial statements, the fairness of the evaluation. The main focus of internal audit is the effectiveness, economy, compliance. 4, the business scope is different. Internal audit of registered financial institutions
Accountant audit is mainly financial auditing, financial auditing to expand to the financial information compiled on behalf of the implementation of the agreed-upon procedures, financial consulting and other activities. And internal audit is based on the financial activities of the enterprise, expanding to the management field is mainly a kind of audit activities. Now on the market some of the internal audit book is not mainly about the content of the financial audit, mainly to avoid duplication with the CPA audit and some internal audit experts' misconceptions lead to, but Sawyer in his book clearly warned that "in the enthusiasm for the favorable impact of these audits, must not go too far, must not ignore the basic financial audit and economic Operational audit". 5, audit standards are different. The standard of internal audit is the recognized guidelines and procedures, and the standard of certified public accountants is the accounting standards and related laws and regulations. 6, professional competence requirements are different. Internal auditing requires a certain level of management knowledge, because the goal of internal auditing is to help companies to achieve its purpose, improve the operation of the organization and increase value, so internal auditors are required to have a certain level of management knowledge and level.
Editing the main content covered by the internal audit work
Internal audit for different industries and fields show specific audit content: For the medical and health care industry Medical fee monitoring Pre-set medical fee price assessment index standard in the system, real-time tracking and supervision of the medical fee system. If the processing of the medical charging system deviates from the corresponding standard indicators, these data will send a signal or message to the supervisors in the monitoring program. Medical Equipment Monitoring System Internal Audit Program Management Standard Operation
The use of large medical equipment can be supervised, and combined with medical fee monitoring, the fees for large medical equipment can be controlled to prevent leakage of fees for medical equipment and the phenomenon of private fees; at the same time, it is convenient for the hospital leadership to understand the use of large medical equipment and the income situation. Drug price monitoring The real-time monitoring of drug prices in the system is realized by real-time tracking and supervision of daily accounting data in the inventory system through relevant monitoring programs. If the processing of the inventory accounting system deviates from the monitoring boundaries or parameters, these data will send signals or messages to the supervisors in the monitoring program. Budget Execution Monitoring for Administrative Institutions The system has the function of automatically reading the budget system, realizes the comparative analysis and penetrating query of financial data and budget data, financial indexes and budget data, and budget indexes according to the correspondence between the set budget items and financial data, finds out the reasons for the discrepancies, and defines the early warning of the budget execution and realizes the early warning prompts of various levels. Special Funds Monitoring Check the execution of special funds sources and expenditures by setting the total amount of special funds sources and sub-amounts as well as the total amount of expenditures and sub-amounts; check whether there is overspending in the execution of revenues and expenditures, and whether there is crosstalk and unstandardized accounting in the expenditures of special funds. Inventory age monitoring of manufacturing industry By monitoring the inventory business of raw materials, semi-finished products, inventory goods and other inventories, the inventory structure, capital consumption, backlog quantity and backlog time of the enterprise are reflected in a timely manner, so as to enable the enterprise's inventory management personnel to timely grasp and adjust the frequency of inventory turnover and revitalize the backlog of funds, which not only guarantees the timely supply of inventory materials to meet the demands of production, but also prevents excessive backlog and improves the efficiency of capital utilization. Monitoring of Sales Business Monitoring of sales business Through the monitoring of sales business, the sales data are updated in real time in the system, so that the sales data such as sales revenue, unit cost and unit profit can be analyzed in time to enable the enterprise management personnel to grasp the market situation in time, especially the sales price of the same product in different markets, so as to make further adjustments to the market strategy. Financial Monitoring The time monitoring of the financial system in the system is realized by the real-time tracking and supervision of the daily accounting data in the financial accounting system through the relevant monitoring program. If the processing of the financial accounting system deviates from the auditing boundaries or parameters, the monitoring program automatically sends out an early warning signal or message to the auditors. Financial normative control Cash sitting monitoring: It can be monitored according to the defined cash sitting checking formula. Abnormal vouchers monitoring: Auditors can define their own account correspondences in abnormal vouchers according to the provisions of accounting system and internal financial system, and the system can prompt and record these abnormal correspondences vouchers in a timely manner when the vouchers occur, as well as prompting the defects of internal control system involved in these abnormal vouchers. Financial analysis monitoring Allows you to set up and combine the methods provided by financial analysis tools, define the criteria for analysis, as well as the conclusions of violating the criteria to form a specific analysis plan, and for each analysis, you can set up the results of the analysis in advance, and through the results of the analysis, you can find out the problems occurring in the management process. Economic Indicator Monitoring You can set the range of indicator values, trend of indicator values, year-on-year number of indicators, and budget number of indicators through the economic indicators defined by the system. Monitoring of large receipts and expenditures By setting the monitoring limits of large receipts and expenditures of cash and bank deposit accounts, the monitoring program will automatically send an early warning signal to the auditor when the amount of receipts and expenditures is too large or the quantity is too much. Audit operation monitoring Helps the audit staff to carry out audit supervision operations in accordance with the law and the authorization of the enterprise, real-time monitoring, timely warning and investigation of illegal and unauthorized issues. Significant Doubt Monitoring By setting up the doubt classification monitoring method, the audit doubts found in the course of audit operations are monitored and prompted according to the principle of significance, which helps the audit supervisor to clearly define the direction of the audit detailed investigation. Monitoring of Significant Non-compliance Amounts By setting up the method of categorizing non-compliance amounts, it monitors the non-compliance amounts identified during the audit process, and helps the audit supervisor to monitor and prompt according to the principle of significance, so that the audit supervisor is alerted to the significance of the non-compliance amount of the audit project. For example, if the amount of violation exceeds 100,000 RMB or more, the system sends a monitoring warning message to the auditor. Monitoring of Non-compliance Issues The system monitors the attributes and importance of non-compliance issues in the course of auditing operations by setting importance criteria for non-compliance issues to help the audit supervisor determine the degree of seriousness of the issue and to alert the audit supervisor of the seriousness of the non-compliance issue in the audit project. For example, the system sends a monitoring warning message to the auditor when the violation is a serious offense such as embezzlement or petty cash. Audit progress monitoring By comparing the actual progress of the audit operation with the planned progress and setting up the planned progress, the system completes the discrepancy monitoring indexes to monitor the progress of the audit operation, and when there is a big discrepancy, it will monitor the alerts in time to help the audit supervisor to understand the possible problems and severity of problems in the audit operation in a timely manner. For example, if the actual progress lags behind the planned progress by 30%, the system will send out a monitoring alert message to the auditors.
Edit this section of the internal audit methods
Shun check method. According to the sequence of economic activities and accounting procedures, in order to review and analyze accounting documents, accounting books and accounting statements. Bocom Audit Management Software provides balance sheet, account ledger, account balance sheet and bookkeeping vouchers and other query page, the auditor can through the networking real-time monitoring system real-time checking tool in the account balance sheet to the account ledger, and then through the account ledger to the vouchers, and finally check the balance sheet generated based on the above data. Reverse checking method. In accordance with the reverse order of economic activities, the first review of the accounting statements, from which to find errors and problems, and then targeted review and analysis of statements, books and vouchers in turn. Brocade Audit Management Software provides balance sheet, account ledger, account balance sheet and journal vouchers and other inquiry pages, as in the case of smooth checking method, auditors can realize the reverse checking method through these pages. Spot check method. Through the voucher sampling function in the voucher checking function of BOCOM Audit Management Software, vouchers of multiple accounts can be sampled. Currently provides three sampling methods, including equidistant sampling, random sampling, PPS sampling, from the audited unit of the audited object to be part of the review, based on the results of the review, by which to infer the overall audit object with or without errors and shortcomings. Review method. Bocom Audit Management Software can review the relevant accounting information obtained in order to determine its compliance and check the bookkeeping vouchers. Analyzing method. Brocade Audit Management Software utilizes the trend analysis function in the real-time verification tool, and through the trend analysis table of this function, it can make a comprehensive comparison of accounting information and analyze the intrinsic connection of all kinds of data in order to find out the problems and determine the focus of the audit. Sample Audit and Detailed Audit Combination Method. In auditing practice, the auditor determines the audit sample on the basis of the internal control system and the importance level assessment, and when there are doubts about a sample, the auditor may expand the number of samples or conduct a detailed audit of the business process of a sample. In the voucher sampling of Brocade's audit management software, the number of samples can be customized and the interval of sampled vouchers can be calculated automatically according to the number of vouchers in the section by setting the sample conditions. Benefit Evaluation Audit Method. BOK Information Audit Management Software through the audit object engaged in economic activity behavior, the use of mathematical measurement or mathematical statistics principles, in the state of internal control system is relatively perfect, targeted development of quantitative evaluation criteria or system, scientific, reasonable and detailed calculation of the economic evaluation of the indicators, reflecting the economy's economy of savings and efficiency benefits and the degree of contribution to society. [1]
Edit paragraph China's internal auditing standards
I. Basis and objectives for the formulation of China's internal auditing standards
(1) China's internal auditing standards are formulated on the basis of the "Auditing Law of the People's Republic of China*** and the State of China", the "Provisions of the Audit Office on Internal Auditing Work", and relevant laws and regulations. (B) the development of China's internal audit standards objectives: l. Implementation of the "Chinese People's *** and State Auditing Law", "Audit Office on the internal audit of the provisions of the work of the internal audit," as well as relevant laws and regulations, to strengthen the work of internal auditing, internal auditing to achieve the systematization, standardization and professionalization of the internal audit. 2. Promote internal audit institutions and personnel to carry out internal audit work in accordance with unified internal audit standards, safeguard the exercise of authority by internal audit institutions and personnel in accordance with the law, ensure the quality of internal auditing, improve the efficiency of internal auditing, guard against audit risks, and promote the self-improvement and development of the organization. 3. Clarify the responsibilities of internal audit institutions and personnel, and give full play to the role of internal audit in strengthening internal control, improving risk management, perfecting the governance structure of the organization, and promoting the achievement of organizational goals. 4. Establishing China's internal auditing standards in line with international internal auditing standards.
The system of China's internal auditing standards
China's internal auditing standards are an important part of China's internal auditing standardization system, which consists of three levels: the basic standards of internal auditing, the specific standards of internal auditing, and the guidelines for internal auditing practice. (i) Basic internal auditing standards. The basic internal auditing standards are the general outline of internal auditing standards, the basic norms to be followed by internal auditing organizations and personnel in conducting internal auditing, and the basic basis for the formulation of specific internal auditing standards and internal auditing practice guidelines. (ii) Specific guidelines for internal auditing. Specific guidelines for internal auditing are formulated based on the basic guidelines for internal auditing, which are the specific norms that should be followed by internal auditing organizations and personnel when conducting internal auditing. (iii) Internal audit practice guidelines. Internal audit practice guidelines are based on the basic standards of internal auditing, internal auditing specific guidelines for internal audit organizations and personnel to conduct internal audits provide operational guidance.
The binding nature of China's internal auditing standards
(1) The basic standards of internal auditing and the specific standards of internal auditing are the standards of practice for internal auditing institutions and personnel, and should be followed by internal auditing institutions and personnel when conducting internal audits. (ii) The internal audit practice guidelines are specific guidance for internal audit organizations and personnel to implement internal audit, internal audit organizations and personnel should refer to the implementation of internal audit.
Fourth, the scope of application of China's internal auditing standards
(1) China's internal auditing standards are applicable to the entire process of internal auditing conducted by internal audit organizations and personnel. (b) China's internal auditing standards are applicable to all types of organizations. Regardless of whether the organization is profit-oriented or not, and regardless of the size and organizational form of the organization, internal audit institutions and personnel shall follow the internal audit standards when conducting internal audits.
V. Procedures for the Formulation of Internal Auditing Standards in China
(1) Internal auditing standards are formulated by the China Institute of Internal Auditing. The Standards Committee under the Association is responsible for drafting, revising and validating the internal auditing standards. (ii) Procedures for the formulation of internal auditing standards in China: l. Selection of projects. The Standards Committee of the China Institute of Internal Auditing puts forward alternative projects of internal auditing standards, which are approved and established by the China Institute of Internal Auditing after consulting and demonstrating by experts and soliciting opinions from relevant parties. 2. Prepare the first draft. The Standards Committee of the Institute of Internal Auditors of China conducts investigation and research and drafts the preliminary draft according to the identified projects. The Institute of Internal Auditors of China consults experts and relevant parties, and the Standards Committee of the Institute of Internal Auditors of China submits the draft for comments after revision. 3. Solicitation of opinions. The Institute of Internal Auditors of China releases the draft for comments and widely solicits comments from all relevant parties. 4. Revision and finalization. The Standards Committee of the Institute of Internal Auditors of China revises the draft according to the opinions of various parties, and the Institute of Internal Auditors of China consults the opinions of experts and relevant parties before finalizing the draft.
VI. Issuance, Revision and Interpretation of China's Internal Auditing Standards
China's internal auditing standards are issued, revised and interpreted by the Institute of Internal Auditors of China. Basic Guidelines for Internal Auditing Chapter I General Provisions Article 1 In order to standardize the work of internal auditing, clarify the responsibilities of internal auditing institutions and personnel, and improve the quality of internal auditing, these guidelines are formulated in accordance with the Auditing Law of the People's Republic of China (PRC), the Regulations on Auditing of the Ministry of Internal Audit of the PRC, and relevant laws and regulations. Article 2 The internal audit referred to in these standards is an independent and objective supervision and evaluation activity within the organization, which promotes the realization of the organization's goals by reviewing and evaluating the authenticity, legality and effectiveness of the business activities and internal control. Article 3 These standards shall apply to the internal audit institutions and personnel of all kinds of organizations, as well as all the auditing activities they engage in. Chapter II General Standards Article 4 The general standards refer to the establishment of the internal audit organization and its authority, the basic qualifications and professional requirements that the internal auditors should have. Article 5 The establishment of an internal audit institution shall take into account the nature, size and internal governance structure of the organization as well as the provisions of relevant laws and regulations, and shall be equipped with a certain number of internal auditors. Article 6 The internal audit institution shall establish a strict quality control system within itself and actively understand and participate in the construction of the organization's internal control system. Article 7 Internal auditors shall possess specialized academic knowledge and business competence, be familiar with the organization's business activities and internal control, and continuously maintain such professional competence through follow-up education. Article 8 Internal auditors shall follow the code of professional ethics and perform audit operations with due professional care. Article 9 The internal audit organization and personnel shall maintain their independence and objectivity, and shall not be involved in any actual operation and management activities of the audited entity. Article 10 Internal auditors shall have basic interpersonal skills and be able to communicate effectively with others in an appropriate manner. Chapter III Operational Guidelines Article 11 Operational Guidelines are the behavioral norms to be followed by internal audit institutions and personnel in the stages of audit planning, audit preparation and audit implementation. Article 12 Internal auditors shall give full consideration to materiality and audit risk during the audit process. Article 13 Internal auditors shall consider the risks of the organization and the needs of management, make audit plans, make reasonable arrangements for audit work, and submit them to the competent leaders for approval before implementation. Article 14 The internal auditors shall serve the audited organization with the audit notice and make necessary preparations for the audit before implementing the audit. Article 15 The internal auditors shall conduct in-depth investigation to understand the situation of the audited unit and test the authenticity, legality and effectiveness of its business activities and internal control. Article 16 The internal auditors may utilize audit methods such as interviews, inspections, sampling and analytical procedures to obtain sufficient, relevant and reliable audit evidence to support audit conclusions and audit recommendations. Article 17 Internal auditors shall actively utilize computers to assist auditing in the audit process. Conducting an audit under a computerized information system shall not change the objectives and scope determined in the audit plan. Article 18 The internal auditors shall record the audit evidence collected and evaluated as well as the audit conclusions and audit recommendations formed in the audit working papers. Chapter IV Reporting Standards Article 19 The reporting standards are the behavioral norms to be followed by the internal auditors in reflecting the audit results and issuing the audit report, as well as by the head of internal audit in approving and reporting the audit report. Article 20 The internal auditors shall issue an audit report at the end of the audit implementation. The preparation of the internal audit report must be based on the audit results and be objective, accurate, clear, complete and constructive. Article 21 The internal audit report shall state the purpose, scope, conclusions and recommendations of the audit, and may include the opinion of the person in charge of the audited unit on the audit conclusions and recommendations. Article 22 The internal audit report shall state that the internal audit is conducted in accordance with the provisions of the Chinese internal auditing standards, and the audit report shall provide explanations and justifications for any non-compliance with the standards. Article 23 The internal audit organization shall establish an audit system for internal audit reports. The person in charge of internal audit shall examine whether the audit evidence is sufficient, relevant and reliable, whether the audit report is clearly expressed, whether the audit conclusions are reasonable and whether the audit recommendations are feasible. Article 24 The internal audit institution shall issue a letter of audit opinion or audit decision to the audited unit after the internal audit report has been approved by the competent leader. Article 25 The audit report of the internal audit organization is a relative assurance of the authenticity, legality and effectiveness of the audited unit's business activities and internal control. Article 26 The internal auditors shall conduct follow-up audits to ensure that the audit conclusions and recommendations set forth in the audit report are effectively implemented. Chapter V Internal Management Guidelines Article 27 The internal management guidelines are the norms for the head of the internal audit institution to manage the internal audit work, make full use of the audit resources, perform the internal audit duties and achieve the audit objectives. Article 28 The head of the internal audit institution shall determine the annual audit work objectives, formulate the annual audit work plan, and prepare the human resource plan and financial budget. Article 29 The head of the internal audit institution shall, in accordance with the Regulations of the People's Republic of China on Auditing of the Chinese People's *** and Domestic Ministries and China's internal auditing standards, and in the light of the actual situation of the organization, formulate an auditing workbook to guide the work of the internal auditors and to serve as a basis for supervision and inspection. Article 30 The head of the internal audit organization shall establish an internal incentive system to supervise, assess and evaluate the work performance of internal auditors. Article 31 The head of the internal audit institution shall maintain contact with the state audit institution and accept the supervision and guidance of the state audit institution in accordance with the law; he shall maintain coordination with the civil audit organization and evaluate the efficiency of its work. Chapter VI Supplementary Provisions Article 32 These Standards shall be interpreted by the Chinese Institute of Internal Auditors and promulgated by the Audit Office. Article 33 These Standards shall come into force on *May*, ****. Code of Ethics for the Internal Auditing Profession Article 1 In performing their duties, internal auditors must strictly abide by the China Internal Auditing Standards and other regulations formulated by the Institute of Internal Auditors. Article 2 Internal auditors shall fulfill their duties with integrity, independence, objectivity and diligence. Article 3 In performing their duties, internal auditors must maintain integrity and must not accept any items of value that would impair their professional judgment. Article 4 Internal auditors must exercise due professional care and perform only those tasks that can reasonably be expected to be accomplished within the scope of their professional competence. Article 5 Internal auditors shall serve the organization honestly and not do anything contrary to the principle of loyalty. Article 6 Internal auditors must observe the principle of confidentiality and use the information they obtain in the performance of their duties with discretion. Article 7 Internal auditors shall not intentionally engage in activities that are detrimental to the interests of the State, the interests of the organization and the honor of the internal auditing profession. Article 8 Internal auditors shall truthfully disclose in their audit reports all material matters of which they are aware. Article 9 Internal auditors shall continuously receive follow-up education and endeavor to improve the quality and ability of innovation and improve the quality of service. The First Bulletin on Internal Auditing Standards No. 1 Internal Audit Report and its Transmission No. 2 Internal Audit Working Papers No. 3 Internal Audit Evidence No. 4 Follow-up Audit Report No. 5 Internal Audit Plan No. 6 Internal Audit Notification No. 7 Quality Control of Internal Audit No. 8 Prevention, Inspection, and Reporting of Frauds No. 9 Reporting on Internal Controls No. 10 Coordination of Internal Audit with External Audit
Edit the development of the concept of international internal auditing standards and inspiration
I. Three turning points in the development of modern internal auditing
The emergence and development of internal auditing is a long historical process, and so far it has gone through three stages of development, namely, the ancient internal auditing, the modern internal auditing and the modern internal auditing. Modern internal auditing began in the U.S. The year 1941 is considered to be the beginning of modern internal auditing.Before 1940 in the U.S., internal auditing was only an assistant to external accounting firms.In 1941, Victor.Z.Brink completed his dissertation for his doctoral degree at New York University, which described the groundbreaking research results of internal auditing, including the nature and scope of internal auditing. With his dissertation, which stated that internal audit should act as a servant to company management rather than as an assistant to external audit (the audit of external accounting firms), Brink became the "founding father" of the discipline of "internal auditing" in the United States. In the same year, John B. Thurston, Director of Internal Audit at North American Corporation, wrote a monograph on internal auditing titled Principles and Techniques of Internal Auditing, and in 1942 Brink published the first comprehensive, systematic treatment of internal auditing in the U.S., Principles and Practice of Internal Auditing. This book has been continuously updated and the fifth edition was released in 2001. The above events marked the beginning of the formation of the systematic theory of internal auditing, the first turning point of internal auditing. In 1978, the Institute of Internal Auditors (IIA) formally issued the Standards for the Practice of Internal Auditing. This is the prototype of "internal auditing standards". Therefore, 1978 was a critical period in the development of internal auditing in the United States and the second turning point in the history of internal auditing. The first page of the "Standards for the Practice of Internal Auditing" was a comprehensive and rigorous definition of the concept of "internal auditing", which was already quite perfect in the economic and auditing field at that time. In the ten years since its promulgation, this standard has been universally recognized by the auditing profession around the world and has been translated into nine languages. In June 1999, the Institute of Internal Auditors (IIA) and its Research Foundation formally issued the Framework for the Practice of Internal Auditing after much discussion, research and consultation with various parties. Just like the framework of financial accounting standards, the Framework for the Practice of Internal Auditing is the core of internal auditing standards, so June 1999 was the third "historic turning point" in the development of the history of internal auditing in the United States. Related documents were issued one after another.
The Internal Auditing Practice Framework
Currently, internal auditing in various countries follows the Internal Auditing Practice Framework, which consists of three levels: (1) the first level is mandatory, and its core content includes the Definition of Internal Auditing, Code of Ethics, and Standards for the Practice of Internal Auditing. 1. Definition of Internal Auditing The Institute of Internal Auditors (IIA) defines internal auditing in its latest Definition of Internal Auditing as: "Internal auditing is an independent, objective assurance and consulting service whose objective is to add value and improve an organization's operations. It evaluates and improves the effectiveness of risk management, control, and governance processes through a systematic, disciplined approach to help organizations achieve their objectives." 2. Code of Ethics The purpose of a code of ethics is to promote an ethical culture within the internal auditing profession. The Code of Ethics is necessary and appropriate for the internal auditing profession due to the fact that internal auditing is built on a foundation of trust that provides objective assurance on risk management, control and governance. The Code of Ethics expands on the definition of internal auditing. 3. Standards for the Practice of Internal Auditing The Standards for the Practice of Internal Auditing consist of Attribute Standards, Performance Standards, and Execution Standards. The Attribute Standards address the characteristics of organizations and individuals engaged in the internal audit activity. The Performance Standards address the nature of the internal audit activity and provide quality standards for measuring internal audit performance. The Attribute Standards and Performance Standards apply to the entire internal audit activity. The Implementation Guidelines apply the Attribute Standards and Performance Standards to specific engagements (e.g., compliance audits, fraud investigations, self-assessment of controls programs). There is only one set of Attribute Standards and Performance Standards, while there may be multiple sets of Implementation Standards, each corresponding to a major type of internal audit activity. (ii) The second level is the Practice Recommendations (i.e., the former Guidelines), which is not mandatory, but is also approved and highly recommended by the IIA. It can assist in interpreting the Standards for the Practice of Internal Auditing or in applying the Standards to a particular internal audit environment. While there are some practice recommendations that may be applicable to all internal auditors, others are primarily used for a specific profession, a specific audit area, or a specific geographic area. (iii) The third level, Development and Practice Guidelines, includes a variety of materials developed or approved by the IIA that are not mandatory. These include studies, books, seminars, and other products and services related to the practice of internal auditing that do not yet qualify as mandatory standards, and are the most extensive and broadest part of the audit practice framework. The Development and Practice Guidelines are used to assist in the implementation of the Code of Ethics, Code of Practice and Practice Recommendations, providing best practice hints and tips.