Markup Version – Proposed Changes to the Standards
International Internal Audit Standards Board (IIASB)The International Internal Audit Standards Board (IIASB) is releasing the exposure draft with proposedchanges to the International Standards for the Professional Practice of Internal Auditing (Standards).
The exposure period is from February 1 to April 30, 2016.
For each change to the Standard or glossary term, the new wording is displayed in red font; deleted
wording is displayed in crossed out blue font; and text that is being preserved without change isdisplayed in regular font style.

1. Change the Introduction of the Standards:
INTERNATIONAL STANDARDS FOR THE PROFESSIONAL PRACTICE OF INTERNAL AUDITING(STANDARDS)
Introduction to the International Standards
Internal auditing is conducted in diverse legal and cultural environments; within organizations that varyin purpose, size, complexity, and structure; and by persons within or outside the organization. Whiledifferences may affect the practice of internal auditing in each environment, conformance with The IIA’s
International Standards for the Professional Practice of Internal Auditing (Standards) is essential inmeeting the responsibilities of internal auditors and the internal audit activityactivities.
If internal auditors or the internal audit activity is prohibited by law or regulation from conformancewith certain parts of the Standards, conformance with all other parts of the Standards and appropriate
disclosures are needed.
If the Standards are used in conjunction with standards issued by other authoritative bodies, internal
audit communications may also cite the use of other standards, as appropriate. In such a case, if
inconsistencies exist between the Standards and other standards, internal auditors and the internal
audit activity must conform with the Standards, and may conform with the other standards if they are
more restrictive.
The purpose of the Standards is to:
1. Delineate basic principles that represent the practice of internal auditing.
1. Provide a framework for performing and promoting a broad range of value-added internal auditing
activities.
2. Establish the basis for the evaluation of internal audit performance.
3. Foster improved organizational processes and operations.
The Standards is a set of are principles-based, principles-focused, mandatory requirements consisting of:Statements of basic requirements for the professional practice of internal auditing and forevaluating the effectiveness of performance, which are internationally applicable atorganizational and individual levels.
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International Internal Audit Standards Board (IIASB)Interpretations, which clarify terms or concepts within the StatementsStandards.

The Standards, together with the Code of Ethics, encompass mandatory elements of the International
Professional Practices Framework (IPPF); therefore, conformance with the Standards and Code of Ethics
indicates conformance with mandatory elements of the IPPF.
The Standards employs terms that have been given specific meanings that are included in the Glossary.
Specifically It is necessary to consider the Standards and their Interpretations as well as the specificmeanings from the Glossary to understand and apply the Standards correctly. Furthermore, theStandards uses the word “must” to specify an unconditional requirement and the word “should” where
conformance is expected unless, when applying professional judgment, circumstances justify deviation.
It is necessary to consider the Statements and their Interpretations as well as the specific meanings fromthe Glossary to understand and apply the Standards correctly.
The structure of the Standards is divided between Attribute and Performance Standards. AttributeStandards address the attributes of organizations and individuals performing internal auditing. The
Performance Standards describe the nature of internal auditing and provide quality criteria against
which the performance of these services can be measured. The Attribute and Performance Standards
are also provided to apply to all internal audit services.
Implementation Standards are also provided to expand upon the Attribute and Performance Sstandards,
by providing the requirements applicable to assurance (.A ) or consulting (.C) activities.
Assurance services involve the internal auditor’s objective assessment of evidence to provide an
independent opinions or conclusions regarding an entity, operation, function, process, system, or othersubject matters. The nature and scope of thean assurance engagement are determined by the internal
auditor. There are Generally, three parties involved in are participants in assurance services: (1) the
person or group directly involved with the entity, operation, function, process, system, or other subject
matter — the process owner, (2) the person or group making the assessment — the internal auditor,and (3) the person or group using the assessment — the user.
Consulting services are advisory in nature and are generally performed at the specific request of anengagement client. The nature and scope of the consulting engagement are subject to agreement withthe engagement client. Consulting services generally involve two parties: (1) the person or groupoffering the advice — the internal auditor, and (2) the person or group seeking and receiving the advice— the engagement client. When performing consulting services the internal auditor should maintainobjectivity and not assume management responsibility.
The Standards appliesy to individual internal auditors and internal audit activities. All internal auditors
are accountable for conforming with the Standards related to individual objectivity, proficiency, and due
professional care. In addition, internal auditors are accountable for conforming with the Standards
which that are relevant to the performance of their job responsibilities. Chief audit executives are
additionally accountable for overall conformance by the internal audit activity with the Standards.
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If internal auditors or the internal audit activity is prohibited by law or regulation from conformancewith certain parts of the Standards, conformance with all other parts of the Standards and appropriate
disclosures are needed.
If the Standards are is used in conjunction with standards issued by other authoritative bodies, internal
audit communications may also cite the use of other standards, as appropriate. In such a case, if theinternal audit activity indicates conformance with the Standards and inconsistencies exist between theStandards and other standards, internal auditors and the internal audit activity must conform with theStandards, and may conform with the other standards if they are more restrictive.
The review and development of the Standards is an ongoing process. The International Internal Audit
Standards Board engages in extensive consultation and discussion prior to issuing the Standards. This
includes worldwide solicitation for public comment through the exposure draft process. All exposure
drafts are posted on The IIA’s Web site website as well as being distributed to all IIA institutes.

Rationale:
Updates are proposed to the Introduction to the Standards to address the July 2015 changes to theInternational Professional Practices Framework, such as the addition of Core Principles. In addition,
minor changes were made to the organization of the introduction to improve clarity.

2. Change to Standard 1000
1000 – Purpose, Authority, and Responsibility
The purpose, authority, and responsibility of the internal audit activity must be formally defined in aninternal audit charter, consistent with the Core Principles for the Professional Practice of Internal
Auditing, the Definition of Internal Auditing, the Code of Ethics, and the Standards. The chief audit
executive must periodically review the internal audit charter and present it to senior management andthe board for approval.
Interpretation:
The internal audit charter is a formal document that defines the internal audit activity's purpose,
authority, and responsibility. The internal audit charter establishes the internal audit activity's position
within the organization, including the nature of the chief audit executive’s functional reporting
relationship with the board; authorizes access to records, personnel, and physical properties relevant to
the performance of engagements; and defines the scope of internal audit activities. Final approval of theinternal audit charter resides with the board.
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Rationale:
The new IPPF has introduced Core Principles that guide all internal audit activities and should beconsidered when determining the content of the charter.
3. Change to Standard 1010
1010 – Recognition of the Core Principles for the Professional Practice of Internal Auditing, theDefinition of Internal Auditing, the Code of Ethics, and the Standards in the Internal Audit Charter
The mandatory nature of the Core Principles for the Professional Practice of Internal Auditing, Definitionof Internal Auditing, the Code of Ethics, and the Standards must be recognized reflected in the internal
audit charter. The chief audit executive should discuss the Mission, the Core Principles for theProfessional Practice of Internal Auditing, the Definition of Internal Auditing, the Code of Ethics, and theStandards with senior management and the board.

Rationale:
The purpose and role of an internal audit activity are based on its Mission. The Core Principles Definitionof Internal Auditing, Code of Ethics and Standards are all mandatory elements of the IPPF and areworthy of discussion with senior management and the board.

4. Change to Standard 1110.A1
1110.A1 – The internal audit activity must be free from interference in determining the scope of internal
auditing, performing work, and communicating results. The chief audit executive must disclose suchinterference to the board and discuss the implications.
Rationale
This change clarifies that the CAE is required to discuss interference that affects the scope, performance,or communication of internal audit activities with the board.

5. Addition of New Standard 1112
1112 Chief Audit Executive Roles Beyond Internal Auditing
Where the chief audit executive has or is expected to have roles and/or responsibilities that fall outsideof internal auditing, safeguards must be in place to limit impairments to independence or objectivity.
Interpretation
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The chief audit executive may be asked to take on additional roles and responsibilities outside of internal
auditing, such as responsibility for compliance or risk management activities. These roles andresponsibilities may impair, or appear to impair, the organizational independence of the internal audit
activity, or the individual objectivity of the internal auditor. Safeguards are those oversight activities,
often undertaken by the board, to address these potential impairments, and may include such activities
as periodically evaluating reporting lines and responsibilities, and developing alternative processes toobtain assurance related to the areas of additional responsibility.

Rationale:
Over the course of recent years, the CAE has been asked or expected to take on additional risk
management and/or internal control related responsibilities. Although the requirements fororganizational independence and individual objectivity are well known, they may be challenged wheninternal audit activities are combined with other organizational activities.

6. Addition of New Standard 1130.A3
1130.A3 – Internal audit may provide assurance services where they had previously performed
consulting services, provided the nature of the consulting did not impair objectivity, and provided
individual objectivity is managed when assigning resources to the engagement.

Rationale:
The current standard 1130 does not address assurance following consulting. The proposed change adds
clarity to reiterate the need to maintain objectivity.

7. Change to Standard 1210
1210 – Proficiency
Internal auditors must possess the knowledge, skills, and other competencies needed to perform theirindividual responsibilities. The internal audit activity collectively must possess or obtain the knowledge,
skills, and other competencies needed to perform its responsibilities.
Interpretation:
Proficiency is a collective term that refers to the knowledge, Knowledge, skills, and other competencies is
a collective term that refers to the professional proficiency required of internal auditors to effectively
carry out their professional responsibilities. It encompasses consideration of current activities, trends,
and emerging issues, to enable relevant advice and recommendations. Internal auditors are encouraged
to demonstrate their proficiency by obtaining appropriate professional certifications and qualifications,2016 Standards Exposure Markup Changes with Rationale For Exposure PDF
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such as the Certified Internal Auditor designation and other designations offered by The Institute ofInternal Auditors and other appropriate professional organizations.

Rationale:
The responsibilities of an internal auditor include providing insight and future-focused advice. Theinternal auditor should help management solve the problems that are identified. Implicit in this is theacquisition of qualifications that are appropriate to the forward-looking analyses and advice that theorganization will need.

8. Change to Standard 1300
1300 – Quality Assurance and Improvement Program
The chief audit executive must develop and maintain a quality assurance and improvement programthat covers all aspects of the internal audit activity.
Interpretation:
A quality assurance and improvement program is designed to enable an evaluation of the internal audit
activity’s conformance with the Definition of Internal Auditing and the Standards and an evaluation ofwhether internal auditors apply the Code of Ethics. The program also assesses the efficiency andeffectiveness of the internal audit activity and identifies opportunities for improvement.
Rationale:
The “Definition of Internal Auditing” is proposed for deletion from the Interpretation as it is embodied in
the Standards and Code of Ethics. It does not need to be evaluated separately in order to demonstrate
conformance with the mandatory elements of the IPPF.
9. Change to Standard 1311
1311 – Internal Assessments
Internal assessments must include:

Ongoing monitoring of the performance of the internal audit activity; and

Periodic self-assessments or assessments by other persons within the organization with
sufficient knowledge of internal audit practices.

Interpretation:
Ongoing monitoring is an integral part of the day-to-day supervision, review, and measurement of theinternal audit activity. Ongoing monitoring is incorporated into the routine policies and practices used to
manage the internal audit activity and uses processes, tools, and information considered necessary toevaluate conformance with the Definition of Internal Auditing, the Code of Ethics, and the Standards.
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Periodic assessments are conducted to evaluate conformance with the Definition of Internal Auditing, theCode of Ethics, and the Standards.
Sufficient knowledge of internal audit practices requires at least an understanding of all elements of theInternational Professional Practices Framework.
Rationale:
The “Definition of Internal Auditing” is proposed for deletion from the Interpretation as it is embodied in
the Standards and Code of Ethics. It does not need to be evaluated separately in order to demonstrate
conformance with the mandatory elements of the IPPF.

10. Change to Standard 1312
1312 - External Assessments
External assessments must be conducted at least once every five years by a qualified, independent
assessor or assessment team from outside the organization. The chief audit executive must discuss withthe board:The form and frequency of external assessment.

The qualifications and independence of the external assessor or assessment team, including any
potential conflict of interest.

Interpretation:
External assessments enhance a complete quality assurance and improvement program and may be
accomplished through can be in the form of a full external assessment, or a self-assessment withindependent external validation. The external assessor must conclude as to conformance with theStandards; the external assessment may also include operational or strategic comments.
A qualified assessor or assessment team demonstrates competence in two areas: the professional
practice of internal auditing and the external assessment process. Competence can be demonstrated
through a mixture of experience and theoretical learning. Experience gained in organizations of similarsize, complexity, sector or industry, and technical issues is more valuable than less relevant experience. In
the case of an assessment team, not all members of the team need to have all the competencies; it is theteam as a whole that is qualified. The chief audit executive uses professional judgment when assessing
whether an assessor or assessment team demonstrates sufficient competence to be qualified.

An independent assessor or assessment team means not having either an actual or a perceived real or anapparent conflict of interest and not being a part of, or under the control of, the organization to which2016 Standards Exposure Markup Changes with Rationale For Exposure PDF
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the internal audit activity belongs. The chief audit executive should encourage board participation in thequality assurance and improvement program to reduce perceived or potential conflicts of interest.
Rationale:
The revisions simplify language and clarify the purpose of the external assessor's report and the intent
of the standard to increase independence of the quality assurance program.

11. Change to Standard 1320
1320 – Reporting on the Quality Assurance and Improvement Program
The chief audit executive must communicate the results of the quality assurance and improvement
program to senior management and the board. Disclosure should include: The scope and frequency of both the internal and external assessments.
 Conclusions of assessors.
 Corrective action plans.
 The qualifications and independence of the assessor(s) or assessment team, including potential
conflicts of interest.
Interpretation:
The form, content, and frequency of communicating the results of the quality assurance andimprovement program is established through discussions with senior management and the board andconsiders the responsibilities of the internal audit activity and chief audit executive as contained in theinternal audit charter. To demonstrate conformance with the Definition of Internal Auditing, the Code of
Ethics and the Standards, the results of external and periodic internal assessments are communicatedupon completion of such assessments and the results of ongoing monitoring are communicated at least
annually. The results include the assessor’s or assessment team’s evaluation with respect to the degreeof conformance.
Rationale:
The revised language clarifies what is expected to be disclosed by the CAE to board and senior
management with respect to QAIP. The “Definition of Internal Auditing” is proposed for deletion fromthe Interpretation as it is embodied in the Standards and Code of Ethics. It does not need to beevaluated separately in order to demonstrate conformance with the mandatory elements of the IPPF.

12. Change to Standard 1321
1321 – Use of “Conforms with the International Standards for the Professional Practice of Internal
Auditing”
The chief audit executive may state that Indicating that the internal audit activity conforms with theInternational Standards for the Professional Practice of Internal Auditing is appropriate only if the resultsof the quality assurance and improvement program support this such a statement.
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International Internal Audit Standards Board (IIASB)Interpretation:
The internal audit activity conforms with the Standards when it achieves the outcomes described in the
Definition of Internal Auditing, Code of Ethics and the Standards. The results of the quality assurance andimprovement program include the results of both internal and external assessments. All internal audit
activities will have the results of internal assessments. Internal audit activities in existence for at least
five years will also have the results of external assessments.

Rationale:
The revised language clarifies that references to conformance are not limited to the CAE. The “Definitionof Internal Auditing” is proposed for deletion from the Interpretation as it is embodied in the Standards
and Code of Ethics. It does not need to be evaluated separately in order to demonstrate conformancewith the mandatory elements of the IPPF.

13. Change to Standard 1322
1322 - Disclosure of Nonconformance
When nonconformance with the Definition of Internal Auditing, the Code of Ethics or the Standards
impacts the overall scope or operation of the internal audit activity, the chief audit executive must
disclose the nonconformance and the impact to senior management and the board.

Rationale:
The “Definition of Internal Auditing” is proposed for deletion from the standard as it is embodied in theStandards and Code of Ethics. It does not need to be evaluated separately in order to demonstrate
conformance with the mandatory elements of the IPPF.

14. Change to Standard 2000
2000 – Managing the Internal Audit Activity
The chief audit executive must effectively manage the internal audit activity to ensure it adds value tothe organization.
Interpretation:
The internal audit activity is effectively managed when:The results of the internal audit activity’s work achieve the purpose and responsibility included in
the internal audit charter.
The internal audit activity conforms with the Definition of Internal Auditing and the Standards.
The individuals who are part of the internal audit activity demonstrate conformance with theCode of Ethics and the Standards.

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The internal audit activity considers trends and emerging issues that could impact theeffectiveness of the internal audit activity.

The internal audit activity adds value to the organization (and its stakeholders) when it considers
strategies, objectives, and risks; strives to offer ways to enhance provides objective and relevant
assurance, and contributes to the effectiveness and efficiency of governance, risk management andcontrol processes; and objectively provides relevant assurance.

Rationale:
The “Definition of Internal Auditing” is proposed for deletion from the Interpretation as it is embodied in
the Standards and Code of Ethics. It does not need to be evaluated separately in order to demonstrate
conformance with the mandatory elements of the IPPF. The proposed additions to the Interpretation are
to better reflect the Core Principles, such as aligning work with strategies, objectives, and risks of theorganization; providing risk-based assurance; and being insightful, proactive, and future-focused.

15. Change to Standard 20102010 – Planning
The chief audit executive must establish a risk-based plan to determine the priorities of the internal
audit activity, consistent with the organization’s goals.
Interpretation:
To develop the risk-based plan, the chief audit executive first considers the risk management frameworkand consults with senior management and the board and then draws conclusions reached from internal
audit’s risk assessment. The chief audit executive is responsible for developing a risk-based plan. The
chief executive takes into account the organization’s risk management framework, including using risk
appetite levels set by management for the different activities or parts of the organization. If aframework does not exist, the chief audit executive uses his/her own judgment of risks after
consideration of input from senior management and the board. The chief audit executive must review
and adjust the plan, as necessary, in response to changes in the organization’s business, risks,
operations, programs, systems, and controls.

Rationale:
The language included in the Interpretation is simplified to avoid use of certain risk management
concepts (e.g., risk appetite) that are not universally defined or understood in all industry sectors. Thechange also clarifies that the final assessment of risk is based on conclusions reached from internal
audit’s risk assessment process, which does consider input from senior management and the board.

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16. Change to Standard 2050
2050 – Coordination and Reliance
The chief audit executive should share information and coordinate activities with other internal andexternal providers of assurance and consulting services providers to ensure proper coverage andminimize duplication of efforts.
Interpretation:
In coordinating activities, the chief audit executive may rely on the work of other assurance andconsulting service providers. A consistent process for the basis of reliance should be established, and thechief audit executive should consider the competency, objectivity, and due professional care of theassurance and consulting service providers. The chief audit executive should also have a clear
understanding of the scope, objectives, and results of the work performed by other providers ofassurance and consulting services. Where reliance is placed on the work of others, the chief audit
executive is still accountable and responsible for ensuring adequate support for conclusions and opinions
reached by the internal audit activity.

Rationale:
As there are number of assurance functions within an organization, the potential for duplicating efforts
through an inefficient silo approach exists. The potential for duplicating efforts and inefficiencies isfurther increased with assurance and consulting services by external providers. Collaboration between
the internal audit activity and other organization risk and control functions (e.g., compliance, ERM,
financial controls, legal, health & safety, quality assurance/quality control) can potentially reduce
inefficiencies, save costs, increase the level of assurance, and better leverage subject matter expertise.
Recognizing that there are other competent assurance functions responsible for assessing organization
risks, mandatory guidance clearly articulating internal audit responsibilities related to other internal andexternal providers of assurance and consulting services is essential.

17. Change to Standard 2060
2060 – Reporting to Senior Management and the Board
The chief audit executive must report periodically to senior management and the board on the internal
audit activity’s purpose, authority, responsibility, and performance relative to its plan, and on its
conformance with the Standards. Reporting must also include significant risk exposures and control
issues, including fraud risks, governance issues, and other matters needed or requested by that require
the attention of senior management and/or the board.
Interpretation:
The frequency and content of reporting are determined collaboratively by the chief audit executive, indiscussion with senior management, and the board. The frequency and content of reporting and dependon the importance of the information to be communicated and the urgency of the related actions to be2016 Standards Exposure Markup Changes with Rationale For Exposure PDF
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taken by senior management and/or the board. The chief audit executive’s reporting and communication
to senior management and the board must include information about:








The audit charter.
Independence of the internal audit activity.
The audit plan and progress against the plan.
Resource requirements.
Results of audit activities.
The level of conformance with the Standards and action plans to address any significant
conformance issues.
Risk accepted by management that may be unacceptable to the organization.

These and other chief audit executive communication requirements are referenced throughout theStandards.

Rationale:
The proposed changes consolidate various reporting requirements that are dispersed throughout theStandards to facilitate conformance. The changes also further clarify specific information that the CAE
must communicate to the board, including level of conformance with the Standards.

18. Change to Standard 2070
2070 – External Service Provider and Organizational Responsibility for Internal Auditing
When an external service provider serves as the internal audit activity, the provider must make theorganization aware that the organization has the responsibility for maintaining an effective internal
audit activity. International Standards for the Professional Practice of Internal Auditing (Standards)
Interpretation
This responsibility is demonstrated through the quality assurance and improvement program whichassesses conformance with the Definition of Internal Auditing, the Code of Ethics, and the Standards.

Rationale:
The “Definition of Internal Auditing” is proposed for deletion from the Interpretation as it is embodied in
the Standards and Code of Ethics. It does not need to be evaluated separately in order to demonstrate
conformance with the mandatory elements of the IPPF.
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19. Change to Standard 2100
2100 – Nature of Work
The internal audit activity must evaluate and contribute to the improvement of governance, risk
management, and control processes using a systematic, and disciplined, and risk-based approach.
Internal audit credibility and value are enhanced when auditors are proactive and their evaluations offer
new insights and consider future impact.

Rationale:
The proposed changes are to better reflect the new Mission statement and Core Principles, including theprinciples that require the internal audit activity to provide risk-based assurance and to be insightful,proactive, and future-focused.

20. Change to Standard 2110
2110 – Governance
The internal audit activity must assess and make appropriate recommendations to for improveing theorganization’s governance processes for: in its accomplishment of the following objectives: Making strategic and operational decisions.
 Overseeing risk management and control.
 Promoting appropriate ethics and values within the organization.
 Ensuring effective organizational performance management and accountability.
 Communicating risk and control information to appropriate areas of the organization.
 Coordinating the activities of, and communicating information among, the board, external andinternal auditors, other assurance providers, and management.
Rationale:
The changes will allow better alignment with the Glossary definition for “governance.” Specifically,sound decision making processes drive the activities of the organization toward the achievement of its
objectives. Risk management and control processes enable comprehensive management and monitoringof the activities of the organization. Moreover, as established in the three lines of defense model, otherassurance providers’ activities and information should be taken into consideration.
This change will also allow the standard to better reflect the Core Principles such as aligning work withthe strategies, objectives, and risks of the organization.
21. Change to Standard 2200
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International Internal Audit Standards Board (IIASB)Internal auditors must develop and document a plan for each engagement, including the engagement’s
objectives, scope, timing, and resource allocations. The plan must consider the organization’s strategies,
objectives, and risks relevant to the engagement.

Rationale:
The proposed changes are to better reflect the Core Principles such as aligning work with the strategies,
objectives, and risks of the organization.

22. Change to Standard 2201
2201 – Planning Considerations
In planning the engagement, internal auditors must consider:The strategies and objectives of the activity being reviewed and the means by which the activity
controls its performance.



The significant risks to the activity’s, its objectives, resources, and operations and the means bywhich the potential impact of risk is kept to an acceptable level.

The adequacy and effectiveness of the activity’s governance, risk management, and control
processes compared to a relevant framework or model.

The opportunities for making significant improvements to the activity’s governance, risk
management, and control processes.

Rationale:
The proposed changes are to better reflect the Core Principles, such as aligning work with the strategies,
objectives, and risks of the organization.

23. Change to Standard 2210.A3
2210.A3 – Adequate criteria are needed to evaluate governance, risk management, and controls.
Internal auditors must ascertain the extent to which management and/or the board has establishedadequate criteria to determine whether objectives and goals have been accomplished. If adequate,internal auditors must use such criteria in their evaluation. If inadequate, internal auditors must workwith management and/or the board to develop appropriate evaluation criteria identify appropriate
evaluation criteria in discussion with management and/or the board.
Interpretation
Internal auditors may leverage different types of evaluation criteria such as:Internal criteria (e.g., policies and procedures of the organization).

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International Internal Audit Standards Board (IIASB)External criteria (e.g., laws and regulations imposed by statutory bodies).
Leading practices criteria (e.g., industry and professional guidance).

Rationale:
The changes reinforce that internal auditors must consider criteria established by management and/or
the board, and if the criteria is inadequate, internal auditors must identify appropriate evaluation
criteria with management and/or board. Internal auditors do not develop the criteria.
The interpretation helps internal auditors to leverage different types of evaluation criteria.

24. Change to Standard 2230
2230 – Engagement Resource Allocation
Internal auditors must determine appropriate and sufficient resources to achieve engagement
objectives based on an evaluation of the nature and complexity of each engagement, time constraints,
and available resources.
Interpretation:
Appropriate refers to the mix of knowledge, skills, and other competencies needed to perform theengagement. Sufficient refers to the quantity of resources needed to accomplish the engagement with
due professional care.

Rationale:
The interpretation is to better reflect the Core Principles such as demonstrating competence and due
professional care.

25. Change to Standard 2330
2330 – Documenting Information
Internal auditors must document sufficient, reliable, relevant, and useful information to support theconclusions and engagement results and conclusions.

Rationale:
The words sufficient, reliable, and useful are added to the text to align this standard with Standard 2310:
Identifying Information. Since conclusions are derived from results, the words are rearranged in thestandard.
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26. Change to Standard 2410 and 2410.A1
2410 – Criteria for Communicating
Communications must include the engagement’s objectives, and scope, and results. as well as applicableconclusions, recommendations, and action plans
2410.A1 - Final communication of engagement results must include applicable conclusions. Final
communication of engagement results must also include all applicable recommendations and/or actionplans. Where appropriate, the internal auditors’ opinion should be provided. contain the internal
auditors’ opinion and/or conclusions. When issued, An opinion or conclusion must take into account of
the expectations of senior management, the board, and other stakeholders and must be supported bysufficient, reliable, relevant, and useful information.

Rationale:
As written, Standard 2410 requires all services — both assurance and consulting — to include
engagement conclusions, recommendations, and action plans. However, some consulting engagementsthat are strictly advisory may not require conclusions, recommendations, or action plans. Therefore,
this proposed change moves the requirements for conclusions, recommendations, and/or action plans
to supporting assurance Standard 2410.A1, but still specifies that all engagement communications must
include objectives, scope, and results. Further, it is not always appropriate or necessary to include both
recommendations and action plans in assurance engagement communications, so "and/or" is used tosignal that either or both are acceptable.

27. Change to Standard 2430
2430 – Use of “Conducted in Conformance with the International Standards for the Professional
Practice of Internal Auditing”
Sstating Internal auditors may report that their engagements are “conducted in conformance with theInternational Standards for the Professional Practice of Internal Auditing” is appropriate only if theresults of the quality assurance and improvement program support the statement.

Rationale:
This change is to simplify the language in the Standard 2430, consistent with Standard 1321.

28. Change to Standard 2431
2431 – Engagement Disclosure of Nonconformance
When nonconformance with the Definition of Internal Auditing, the Code of Ethics or the Standards
impacts a specific engagement, communication of the results must disclose the:2016 Standards Exposure Markup Changes with Rationale For Exposure PDF
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Principle(s) or rule(s) of conduct of the Code of Ethics or the standard(s) Standard (s) with whichfull conformance was not achieved.
Reason(s) for nonconformance.
Impact of nonconformance on the engagement and the communicated engagement results.

Rationale:
The “Definition of Internal Auditing” is proposed for deletion from the standard as it is embodied in theStandards and Code of Ethics. It does not need to be evaluated separately in order to demonstrate
conformance with the mandatory elements of the IPPF.

29. Change to Standard 2450
2450 – Overall Opinions
When an overall opinion is issued, it must take into account the strategies, objectives, and risks of theorganization; and the expectations of senior management, the board, and other stakeholders. The
overall opinion and must be supported by sufficient, reliable, relevant, and useful information.
Interpretation:
The communication will identify include: The scope, including the time period to which the opinion pertains.
 Scope limitations.
 Consideration of all related projects, including the reliance on other assurance providers.
 A summary of the information that supports the opinion.
 The risk or control framework or other criteria used as a basis for the overall opinion; and The overall opinion, judgment, or conclusion reached.

The reasons for an unfavorable overall opinion must be stated.

Rationale:
The proposed change to the Standard better demonstrates linkage to the new Principle, “Aligns with thestrategies, objectives, and risks of the organization.” The proposed change to the interpretation
identifies that it is important for opinions to be supported by sufficient evidence so that the users of thecommunication have confidence that they can rely on the results.

30. Change to Definition of Board
Board
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The highest level of governing body charged with the responsibility to direct and/or oversee theactivities and hold senior management of the organization. Typically, this includes an independent groupof directors accountable (e.g., a board of directors, a supervisory board, or a board of governors ortrustees). If such a group does not exist, the “board” may refer to the head of the organization. “Board”
may refer to an audit committee to which the governing body has delegated certain functions. Althoughgovernance arrangements vary among jurisdictions and sectors, typically the board includes members
who are not part of management and is not solely comprised of members of management. If a board
does not exist, the word “board” in the Standards refers to a group or person charged with governance.
Furthermore, “board” in the Standards may refer to a committee or another body to which thegoverning body has delegated certain functions (e.g. an audit committee or risk committee).

Rationale:
The changes remove the suggestion that the ‘head of an organization’ is viewed as an acceptable
alternative to an independent board. Although governance arrangements vary significantly, an
independent governing body is preferable. The underlying principle is that the independence of the CAE
is safeguarded when the CAE is not subject to inappropriate influence by board members who aresubject to audit.

31. Change to Definition of Chief Audit Executive
Chief Audit Executive
Chief audit executive describes a person in a senior position responsible for effectively managing theinternal audit activity in accordance with the internal audit charter and the Definition of Internal
Auditing, the Code of Ethics, and the Standards. The chief audit executive or others reporting to thechief audit executive will have appropriate professional certifications and qualifications. The specific job
title and/or role of the chief audit executive may vary across organizations.
Rationale:
Over the course of recent years, some chief audit executives have been given expanded roles andresponsibilities in risk management that extend beyond internal audit. Further, the chief audit executive
is increasingly an organizational manager and not a professional auditor. This prompts reconsiderationof the definition of a chief audit executive.

32. Addition of Definition of Core Principles for the Professional Practice of Internal Auditing
Core Principles for the Professional Practice of Internal Auditing
The Core Principles for the Professional Practice of Internal Auditing (Core Principles) are the2016 Standards Exposure Markup Changes with Rationale For Exposure PDF
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key elements that describe internal audit effectiveness. The Core Principles underpin the Code of Ethics
and the Standards.
Rationale:
This addition defines a new element of the New IPPF introduced in July 2015.

33. Change to Definition of International Professional Practices Framework
International Professional Practices Framework
The conceptual framework that organizes the authoritative guidance promulgated by The IIA.
Authoritative Guidance is comprised of two categories – (1) mandatory and (2) strongly recommended.
Rationale:
This reflects the change to the title of the recommended element of the New IPPF, which was launched
in July 2015.

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