1. IIA Mid-Columbia Luncheon Seminar
Dr. Brian K. Steverson
John L. Aram Chair of Business Ethics
School of Business Administration
Gonzaga University

2. The Virtuous Auditor

3. Overview of Today’s SESSION
Internal Auditing as a Profession
Discuss the Four Principles of the Institute of Internal Auditors Code of Ethics
Focus on “Integrity” and “Objectivity”
Why Virtue?

4. Why Professions? Social Need Vulnerability of Individuals
Impact on Common Good
Ethical Values
Dignity of the Person
Rights
Social Contract
Need for Trust
Development of Codes/Standards of Conduct

5. What Makes for a Profession?
Koehn’s “frequently cited traits”
They belong to an organization of similarly enfranchised agents who promulgate standards and /or ideals of behavior and who discipline one another for breaching these standards.
They possess so-called “esoteric” knowledge or skills not shared by other members of the community.
They exercise autonomy over their work which is not well understood by the larger community.
They publicly pledge themselves to render assistance to those in need and as a consequence have special responsibilities or duties not incumbent upon others who have not made this pledge
-- Daryl Koehn, The Ground of Professional Ethics, 1994

6. The Public Pledge
Most often cited as THE distinguishing feature of professions
“One distinguishing feature of any profession, unlike other occupations that may be equally respectable, is that membership entails an ethical obligation to temper one's selfish pursuit of economic success by adhering to standards of conduct that could not be enforced either by legal fiat or through the discipline of the market.”
-- Justice Sandra Day O’Connor, 1988
Shapero v Kentucky Bar Association

7. IIA Core principles
Integrity
Objectivity
Confidentiality
Competency

8. “Integrity” in the IIA Code
“The integrity of internal auditors establishes trust & thus provides the basis for reliance on their judgment”
Perform work with honesty, diligence, and responsibility
Observe the law and make disclosures expected by law and profession
Shall not knowingly be party to illegal activity or engage in acts discreditable to profession or organization
Respect and contribute to legitimate and ethical objectives of organization

9. Integrity as true north on professional moral compass
Integrity as a Specific Virtue
Consistency between Belief & Action
Integrity as Holistic Virtue
To be Whole; to be Undivided
Self-Integration

10. “Acting with integrity”
Acting (in accordance with) integrity
Action conforms to what integrity requires
Motivation irrelevant
Accidental/Coincidental
Acting (from a sense of) integrity
Internal cause of action is character trait
Motivation is what matters
More stable/reliable
An action has moral worth only if it expresses a good will
-- Immanuel Kant

11. “Objectivity” in the IIA Code
“Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information Internal auditors make a balanced assessment of all relevant circumstances and are not unduly influenced by their own interests or by others in forming judgment.”
Shall not participate in any activity or relationship that may or be presumed to impair their unbiased assessment
Shall not accept anything that may or be presumed to impair their professional judgment
Shall disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review

12. “objectivity” in International Standards for the professional Practice of internal Auditing
“Objectivity is an unbiased mental attitude that allows internal auditors to perform engagements in such a manner that they believe in their work product and that no quality compromises are made.” “Objectivity requires that internal auditors do not subordinate their judgment on audit matters to others.”

13. “OBJECTIVTY” AS CHARACTER TRAIT
Mental Attitude; cognitive not conative Stable, not transitory; the “will” Requires self-control; denial of self-interest Confidence of judgment

14. Mandatory & Non-Mandatory Virtues*
Minimum Requirements to Actually Exercise Professional Judgment
Non-Mandatory Virtues
Go Beyond the Minimum, Influence Professional’s Formulation of Judgment According to Ideal Standard
* Theresa Libby & Linda Thorne, “The Identification and Categorization of Auditors’ Virtues,” Business Ethics Quarterly, vol. 14 (2004):

15. THANK YOU