ETHICS INTERNAL AUDIT S ROLE

Transcription

1 ETHICS INTERNAL AUDIT S ROLE 17 October 2006 Why is ethics important to internal auditors? It s the foundation of Governance; It s a key element of risk management and internal control in organisations; It concerns everyone; The Professional Practices Framework requires IA to evaluate the effectiveness of ethics-related activity. 1

2 And personally? Internal auditors must behave in an ethical manner to maintain their credibility; Ethical appearances are as important as substance; Bound not only by code of ethics for organisation but also by code of ethics for their profession. Key elements of an ethical culture Leadership tone at the top; Code of Conduct; Clear communication of organisation s core values; Rigorous pre-employment screening Staff empowerment to report unethical behaviour; Monitoring and evaluation of ethical climate in the organisation; Internal training and publicity 2

3 Audit of organisation s ethical culture Look at some of the more formal controls where evidence is easier to find, for example: External surveys suppliers, customers Benchmark standards or guidelines Organisation values Code of conduct Strategic plan Legislation Recognised standards document Training Qualitative aspects of auditing ethics Need to tackle the softer controls Management commitment to tackling unethical behaviour through, for example: Investigating allegations of unethical behaviour; Taking action where allegations are proven; Looking at the way in which those making allegations (whether proven or not) are treated; Anecdotal information/observation. 3

4 Evaluation of an agency s misconduct reporting system Statement Strong ly agree Agree Neither agree nor disagree Disagr ee Strongly disagree (a)an employee who reports information tending to show misconduct by another employee is likely to suffer because of it. (b)an employee who reports information tending to show misconduct by another employee is a troublemaker. (c)an employee who reports information tending to show misconduct by another employee performs an act of disloyalty. (d)an employee who reports information tending to show misconduct by another employee often has an improper motive for doing so, such as personal gain. (e)an employee who reports information tending to show misconduct by another employee breaks down trust amongst work colleagues. (f)an employee who reports information tending to show misconduct by another employee to an authority is likely to be socially ostracised. (g)an employee should be able to report information tending to show misconduct by another employee without fear of reprisal. (h)an employee who reports information tending to show misconduct by another employee to an authority has existing protections from reprisal which are adequate. (i)in almost all instances, an employee who reports information tending to show misconduct by another employee will have their report assessed and investigated in a fair and impartial manner. (j)an employee who reports information tending to show misconduct by another employee to an authority is performing their work duty. Assessing related data Statistical data on complaints, investigations, referrals and outcomes No of complaints Rate of complaints No of substantiated complaints Comparative evaluation Exit interview data 4

5 Rate of Complaints per 1000 Staff Rate of Complaints per 1000 Staff Rate of Complaints Financial Year Queensland Department Health X Public Service Departments Conclusion Internal Audit have an important role with regard to ethics in an organisation: They need to be seen to be behaving in an ethical manner; They need to promote the need for ethical behaviour throughout the organisation as part of their routine audit work; They need to carry out periodic reviews of the effectiveness of their organisation s ethics-related activities. 5