The Chartered Institute of Internal Auditors (CIIA) has called for internal audit to be accountable to the UK Financial Reporting Council’s (FRC) corporate governance code requirements, particularly regarding audit independence.
The FRC released a consultation in December 2017 to revise and shorten the code by removing exemptions for smaller listed companies outside the FTSE 350, and increasing company disclosure over executive pay policies and consultation methods. The CIIA has suggested that the code should require regular monitoring and reviewing of the independence and objectivity of internal audit.
CIIA chief executive Ian Peters said: “It has become clear that, in the context of very public corporate failures like [construction company] Carillion, the role of internal audit needs to be scrutinised and held to the highest standards. It is critical we have a corporate governance framework in place that reflects our current environment.”
Following the CIIA’s Financial Services Code, the institute intends to work on producing a Code of Practice for other sectors later this year, to set out the role, scope and priorities of internal audit.