RENZO N.

MELLIZA BSAT - IV

EXAMPLES OF IMPAIRMENT ON CODE OF ETHICS

OBJECTIVITY

An internal auditor audits an area in which he or she recently worked, such as when an
employee transfers into internal audit from a different functional area of the organization
and then is assigned to an audit of that function. (Standard 1130.A1 specifically addresses
this situation).
An internal auditor modifies the planned approach or results based on the undue influence
of another person, often someone senior to the internal auditor, without appropriate
justification.

CONFIDENTIALITY

An internal auditor has uncovered facts that could be interpreted as indicating unlawful
activity on the part of an engagement client. The internal auditor decides not to inform
senior management and the board of these facts because of lack of proof. The internal
auditor, however, decides that, if questions are raised regarding the omitted facts,they will
be answered fully and truthfully.
The chief audit executive (CAE) disagrees with the engagement client about the observations
and recommendations in a sensitive area. The CAE discusses the detail of the observations
and the proposed recommendations with a fellow CAE from another organization.
INTEGRITY

Knowing that management was aware of the situation, an internal auditor

purposely left a description of an unlawful practice out of the final engagement
communication.
Prohibit unauthorized changes or removal of information. The working papers are essential
to the proper functioning of the internal audit activity. Among many other purposes, they
document the information obtained, the analyses made, and the support for the conclusions
and engagement results. Unauthorized changes or removal of information would seriously
compromise the integrity of the internal audit activitys work. For this reason, the chief audit
executive must ensure that working papers are kept secure.

CONFIDENTIALITY

Misplaces working papers occasionally.

An internal auditor is performing services in a division in which the chief financial
officer is a close personal friend, and the internal auditor learns that the friend is to be
replaced after a series of critical labor negotiations. The internal auditor relays this
information to the friend.
Purchasing stock in a target entity after overhearing an executives discussion of a possible
acquisition.