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20. Explain principles of ethics in audit 21. Estimate development in audit digitalization

20. Explain principles of ethics in audit
21. Estimate development in audit digitalization

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Expert Solution

20) The Code of Ethics states the principles and expectations governing the behavior of individuals and organizations in the conduct of internal auditing. It describes the minimum requirements for conduct, and behavioral expectations rather than specific activities.

The purpose of the Code is to promote an ethical culture in the profession of internal auditing. A code of ethics is necessary and appropriate for the profession of internal auditing, founded as it is on the trust placed in its objective assurance about risk management, control, and governance. The Institute's Code of Ethics provides principles and rules of conduct under four headings: • Integrity • Objectivity • Confidentiality • Competency The Rules of Conduct describe behaviour norms expected of internal auditors. These rules are an aid to interpreting the Principles into practical applications and are intended to guide the ethical conduct of internal auditors. Below they are set out together with the principle they interpret. The Code of Ethics provides guidance to internal auditors serving others. 'Internal auditors' refers to Institute members and those who provide internal auditing services within the definition of internal auditing.

Rule Principle
Integrity The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgement.
Objectivity Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors make a balanced assessment of all the relevant circumstances and are not unduly influenced by their own interests or by others in forming judgements.
Confidentiality Internal auditors respect the value and ownership of information they receive and do not disclose information without appropriate authority unless there is a legal or professional obligation to do so.
Competency Internal auditors apply the knowledge, skills and experience needed in the performance of internal auditing services.

21)  When we think of changes to the financial statement audit, we tend to think in big, broad strokes. The period right after the stock market crash of 1929, for example, ushered in the modern era of independent audit of financial statements, a key to public confidence in our global markets.

The interplay between human and artificial intelligence is a key focus of “Evolving Auditing in the Future,” one of the strategic priorities of the Association of International Certified Professional Accountants, the global organization that represents the unified voice of the American Institute of CPAs and the Chartered Institute of Management Accountants. Beyond changes to the financial statement audit, I foresee broad, tech-driven opportunities to evolve assurance in several areas — such as data integrity and cybersecurity risk management — that will strengthen trust and confidence in our global markets.

The changes to the financial statement audit will be shaped by four factors: technology, methodology, standards and skills.

Artificial intelligence is another technology that we are researching, first to better understand how to address the lack of transparency around complex algorithms when using artificial intelligence and, more specifically, machine learning in the context of the audit. We are also considering the practical application of AI to build on the ability of data analytics to support the exploration of information examined as part of the financial statement audit.

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