Domain II: Foundation of Trust – Ethics & Professionalism

Why Ethical Conduct is the Cornerstone of Internal Auditing

One principle stands above all: trust. Domain II of the internal audit competency framework—Foundation of Trust: Ethics & Professionalism—captures the heart of this principle. At its core, this domain reminds us that ethical conduct isn’t just a guideline—it’s the very foundation of credibility, effectiveness, and public trust.

Why Ethics Matter in Internal Auditing

Imagine an internal auditor discovering suspicious financial transactions but deciding not to report them because they fear upsetting senior leadership. Or consider an auditor who accepts gifts from a vendor under review. In both cases, the lack of ethical judgment undermines not just the auditor’s work, but the reputation of the entire audit function.

Ethical lapses can have far-reaching consequences: financial losses, reputational damage, regulatory penalties, and—perhaps most importantly—a loss of stakeholder confidence. Without ethics, internal audit loses its purpose.

A Code That Keeps Up with the Times

Recognizing the changing business environment, the International Professional Practices Framework (IPPF) has updated its Code of Ethics to reflect modern challenges—remote work, data privacy, artificial intelligence, ESG risks, and more. This updated Code now emphasizes:

• Integrity in both physical and digital environments
• Objectivity when dealing with complex data
• Confidentiality in managing sensitive information
• Competency in emerging technologies and global issues

It’s no longer enough to simply follow the rules—auditors must now demonstrate ethical awareness in a world that’s faster, more transparent, and more interconnected than ever.

The Auditor Who Spoke Up

Take the case of a multinational company where an internal auditor identified inflated sales figures reported to investors. Rather than staying silent, the auditor followed the Code—reporting the issue through the appropriate channels, despite pressure from upper management to ignore it.

The result? The organization was able to correct its financial statements, avoid a major regulatory fine, and reinforce its commitment to ethical behavior. The auditor, although under stress, was later recognized for their integrity.

This example illustrates how ethical behavior isn’t always easy—but it is always essential.

Ethics Is Everyone’s Job

Ethics and professionalism apply to every internal auditor—from a junior associate to the Chief Audit Executive. It's not a “soft skill” or an optional layer; it's the core requirement for every engagement, conversation, and decision.

Auditors must ask themselves:

• “Am I being objective?”
• “Can I justify my decisions if questioned?”
• “Am I putting the organization’s long-term value ahead of short-term gain?”

These questions help auditors build not just good audit reports—but trust with stakeholders, regulators, and the public.

Trust Begins With Us

Internal audit’s value lies in its independence and credibility. Both are only possible when auditors act ethically and professionally. Domain II reminds us that ethics isn’t a box to check—it’s a mindset to live by.

In a world where one unethical decision can go viral, the most powerful tool an internal auditor can carry isn’t just a checklist—it’s their integrity.