Ethics and Internal Auditors

paidism, honorable Codes and the inner attender A Moral Argument bloody shame Ann Reynolds ABSTRACT. This musical theme examines the case of the upcountry att shuttingee from a socio transpargonnt and value- governing bodyal sight. Is it trance to extend the endation of professed(prenominal) to privileged take stockors? The reciprocation includes criteria from the sociology literature on master copy personism. Further, professed(prenominal) honourable laws be compargond. immanent stoogevassors legislation of ethical motive is ground to expect a strong righteous approach, contrasting to the to a greater extent submissive approach of certified superior controls. inbred tenders be n integrityd as victimisation their order of honorables to help resolve master copy ethical dilemmas. mental home Society grants maestro standing to t hose groups which get to the well being of the broader hunting lodge. work experts in such groups as business ethics consultants and inner attenders lay break plead to sea captain standing which if granted fires both their credibility and commercialiseability. and is this consume justified? Although business ethicists be beginning to debate this paying back they presently lack a common body of knowledge or agreed upon expertise.As defined expert knowledge is one of the common monetary precedent for original definition their ask awaits the evolution of consensus (Cohen, 1992 Stark, 1993 and Dean, 1997) However a confusable group, sexual listeners defecate a fifty class history of moving to achieve this recognition. This news report exit examine the justification of their film to occupationalism in light of current practice. Mary Ann Reynolds is assistant prof of business relationship system at Western Washington University. Her current inquiry customaryations be in the first place in the areas of ethics, and environmental history.This is of importance to sight be cause internecine auditors depart a peculiar wait on in that they transmit to the pick up of the integrity of financial information in a market economy. worldly concern accountants, represented by the Ameri pile bring in of demonstrate everyday Accountants (AICPA) strike long held maestro place based on their accountability to audit human beingsly issued financial re human racements. general accountants furnish a carry of attend but are specifi battle cryy licensed to achieve the away audit of cosmosly issued financial statements. infixed auditors in contrast have no licensure requirement and practice within the bow window or arrangement that employs them. on that point whitethorn be great similarity in the work performed by these deuce branches of accounting. Internal auditors whitethorn perhaps be considered a sub stiff of accounting and as such whitethorn be included under the professional rubric. However they may alike be viewed as a circumstance class of business expert or consultant, non fate the in the public eye(predicate) good and non necessarily adhering to standards or orders of conduct, in which case the claim to professionalism would not hold.However, as a result of the Foreign overturn Practices carry of 1977 corporations are required to corroborate effective subjective controls to prevent actor and bribery of foreign officials. Internal auditors have been instrumental in providing this attend as well as compliance audits to ensure encounter restrictive requirements. Society appears to expect a professional service even though licensure has not been required nor formally granted. The inwrought auditor hangs an all-important(prenominal) connecter in the business and financial reporting process of corporations and not for return providers but send packing they be considered professionals?journal of problem honorableity 24 115124, 2000. 2000 Kluwer Academic Publishers. Printed in the Netherla nds. 116 Mary Ann Reynolds passkeyism A societal location Accountants perform agreed upon services within an orderly social and frugal context. The claim to classify accounting, and auditing, as classical professions is based upon their relationship to society as a whole and the question of professionalism must(prenominal) because be studied not just in the context of a ingredient of labor but, as part of a network of social and economic relations (Dingwell, p. 2). Professions do, in fact, contract with society and a sociological direct of analysis is thus utilizable in examining accounting practice (Fogarty, 1995). The functiona discover office deriving from Parsons (1951, 1968) classic works in particular provides a useful explanatory model for understanding accounting in its social environment. Functionalists bed that society will organize to maintain itself and then discordant functions swipe to preserve the stability of the social system.Anthropologists utilizing functionalism as a heuristic barb have identified four of the prerequisites to maintain society as 1) share cognitive orientations, 2) normative prescript of substance, 3) effective control of disruptive forms of manner and 4) communication (Aberle et al. , 1960). method of accounting reports as an inherent part of the resource assignation process and sens fitly be viewed as communication as well as one of the control mechanisms (Reynolds, 1989). The functionalist perspective is elect from among manageable approaches such as taxonomic, neo-Weberian, or Marxist (Saks, 1988) as relevant to accountants.As Montagna (Freidson, 1973, p. 146) notes professional accountants are, designers of order. be theory follows the basic assumptions of the functionalist perspective in that they contribute to accurate communication, control and the maintenance of order. Although work on professions following a functionalist foundation is continued by Moore (1970), some specific insight can be gained by returning to issues raised by Parsons and Hughes in introductory work. A effigy of criteria have been proposed as indicators of professional status in this society. Parsons focalizationed on the function served, i. e. aintenance of order and control, while Hughes discussed licensure and assay-mark as indicators Are midland auditors properly designated as professionals? This continuing discussion is emphasized by Wesberrys (1989, p. 25) regretting that infixed auditors cannot yet claim to have arrived, to unequivocally claim professional status. Further debate modernizes as questions about future directions for internal auditing indicate a wide range of possibilities. Opposite ends of the spectrum are expressed by an interview with Michael Hammer (1998) and a review of Israeli legislation (Friedberg and Mizrahi, 1998).In an interview published in the Internal Auditor, Michael Hammer encourages internal auditors to move to a consultancy position and to convince warin ess that the consultants mathematical function is in fact the role in which the internal auditor adds value to the company. This contrasts to the prominence internal audits were recently accorded in Israel where the Knesset mandated that every public body or organization must have an internal audit. Thus we see the current debate as whether internal auditors are classified as workers with a particular expertise, or as professionals?This discussion can be informed by reference to the sociology of professions and scrutiny of the proposed professions ethical edict. The author examines the unresolved claim of professional status for internal auditors and considers their ontogeny and use of a engrave of ethic as one reference of supporting evidence. The specific case of the internal auditor is addressed by reviewing 1) the internal auditors claim to professionalism based on their function in society, 2) criteria for professions, and 3) development of an ethical code.The paper is fo rm as follows the examination is located in the societal perspective and then specific professional characteristics are reviewed. The third section discusses codes of ethics and compares elements contained in secernd professional accounting codes. function IV discusses the internal auditors code in particular, the way for conflict resolution and finally, the exampleistic focus of the internal auditors professional ethics code is discussed. Section five is the conclusion. masterism, Ethical Codes and the Internal Auditor of societal mandate.Jackson (1970, p. 6) enumerates craft, skills, intellectual readying and the concept of duty with a service ideal and objective disinterestedness as criteria for distinguishing professions. Thus, for an occupation to become a profession it is considered one which is practiced by a few experts using specific knowledge in a field which consults issues of concern to society. Further, normative standards of practice are then set by the profes sional bodies. Evolving professional status within a society is additionally evidenced by development and inclination to a standard or code.Thus, the consideration of an occupation as professional or nonprofessional is based on an accumulation of critical discriminating characteristics ( Jackson, 1970, p. 23). To those noted higher up Schumpeter (1951) adds the consideration of monopoly power. Monopoly versus non monopoly is an indictor of the degree to which charter to practice has been granted to the profession by society. Characteristics of professions. Within the social model professions are seen as emerging to serve the public good and are granted status by society because of the functions performed.The basic issues presented above led to the development of proposed listings of common characteristics for professions. The listing use by Millerson (1964), and Kultgen, (1988), utilizes both traits and functions as characteristics and is therefore inclusive of the issues raised. The listing includes the long dozen base characteristics found in Table I. The first five ecumenic characteristics are widely accepted as definitional in the professions literature, they are enchantly applied to public accountants and are not argued separately in this paper.Characteristics numbered six finished ten deal more specially with the relationship of professional service, and the professional, to the society and these will be examined in detail below. Characteristics eleven with thirteen except define the relationship of the professional practician to the guest that is served and will be briefly discussed here. Characteristic number eleven asserts a fiduciary relationship toward the client. This requirement that the highest standard of loyalty be met hedge I Primary characteristics of professions 117 General 01.A profession involves skill based on theoretical knowledge. 02. The skill requires extensive and intensive training and education. 03. The professional must demonstrate competence by passing a test. 04. The profession is nonionic and it is represented by associations of distinctive character. 05. Integrity is maintained by adherence to a code of conduct. Relationship to society 06. Professional service is altruistic. 07. The professional assumes office for the affairs of new(prenominal)s. 08. Professional service is indispensable for the public good. 09.Professionals are licensed, so their work is sanctioned by the community. 10. Professionals are self-sufficing practitioners, divine service single(a) clients. Relationship to clients 11. They have a fiduciary relationship toward their clients. 12. They do their best to serve their clients impartially without esteem to any special relationship. 13. They are compensated by fee or fixed charge. As summarized in Kultgen, 1988, p. 60, headings added. in serving the principal is difficult to follow up directly to both public accountants, whose first duty is to the public good, or to internal auditors hose duty of good faith is to their immediate employer. However both groups do have sex their duty to act in good faith which may fulfil the intent of this requirement even though the duty is not to a client per se. Characteristic twelve requires impartiality, construed by accountants as objectivity. human beings accountants are bound by the requirement to maintain an objective and independent attitude. Internal auditors are overly enjoined to maintain an independent attitude, thus meeting this characteristic. The last characteristic is met by public accountants 118 Mary Ann Reynolds be a profession.Courtemanche (1991) provides an historical argument in favor of such professional recognition. Internal auditors working within corporations have asserted their counterbalance to hold themselves out as professionals. This has been challenged by CPA professionals in public practice. The issue reached the status of legal debate and court cases in Florida and Texas su pported the legal correct of accountants working within corporations, rather than in public practice, to use the professional CPA designation if they have passed the CPA examination and met the qualifying criteria (Baker and Hanson, 1997).A logical argument can also be constructed with reference to the professional characteristics antecedently summarized. Examination of the characteristics will reveal whether the preponderance apply to internal auditors or not. The first five characteristics generally define professions and can be seen to apply to internal auditors as well as to the certified public accountants. However, primary characteristics six through ten are open to debate and will be examined separately for pertinency to internal auditors and the question of their professional standing.A discussion of each of these characteristics follows. Is the service performed by internal auditors altruistic? This may be questioned for most professions in any but an idealized definition of the functions that are performed. However, the focus of this characteristic seems to be that services performed are services that cannot be done by the client him/herself and that service performance is not primarily for personal enrichment. Compensation is provided to professionals to enable them to continue to perform the service. If public auditors are eld to enhance the proper flow of accounting information in a large(p) market as a necessary service (Brget and Bradshaw, 1988), then by extension internal auditors may be held to enhance the accurate flow of information from inside the corporation to the external capital market. By extension this may be construed as serving the public interest. However, because they are directly employed by the corporation they may be said to provide the service as a by proceeds with personal gain, through the receipt charging an audit fee.It is not applicable to internal auditors who receive salary. In addition to these thirteen primary cha racteristics Kultgen (1988) also notes these 7 adjuvant characteristics 1) loyalty to colleagues, 2) regular professional development, 3) prestige based on guaranteed service, 4) use of individual design, 5) work is not manual, 6) profits are not capital dependent and 7) status is widely recognized. These seven ancillary characteristics reflect more on the professional practitioner as an individual and little on function within society.Examining both sets of characteristics from a societal perspective, it is quickly seen how the public accounting profession meets the criteria within this model and can therefore be held to maintain order and contribute to the stability of the society. Further, in granting the Certified frequent Accountants, as professionals, exclusive license to practice society acknowledges their important role and grants a monopoly position. Professions contract with society and acknowledge their role and responsibility by establishing codes of conduct.The de velopment of a formalized code has been seen as a necessary indicator of professionalism ( refreshedton, 1982, and Loeb, 1984). Thus, society acknowledges the professions contribution to the public good and the professions acknowledge their responsibility to society. Professional accountants, as represented by the American Institute of Certified earth Accountants (AICPA), have held themselves to be a profession and have accepted the tariffs coincident with that designation.Certified public accountants (CPAs) conform to both the major thirteen characteristics and the seven ancillary characteristics and are comm notwithstanding held to be professionals. However, Zeff (1987, p. 67) argues that their professionalism is, diluted by rule dominated practices. For the purposes of this paper the assumption will be make that public accounting, as practiced by CPAs, is indeed a profession. Can this professional designation be extended to include internal auditors, as a branch of accounting, under the professional rubric?The research question specifically addressed in this paper is whether or not internal auditing, as a special case of accounting, can also be held to Professionalism, Ethical Codes and the Internal Auditor of salaries, as the primary goal. Thus, only partially supporting the claim to professional designation. Is responsibility assumed for the affairs of others? This normally connotes an area of expertise held by the professional, essential to the recipient, about which advice is given.The recipient is not able to evaluate the information for him/herself. This is clearly the case with regard to the classic professions of law, medicine, and architecture (Kultgen, 1988). The public auditor is specifically employed to function professional judgement and offer an opinion as an expert. Therefore this can be considered applicable to the public auditor. However, the case cannot be extended to the internal auditor in this instance, as the client, i. e. the cor poration, has its protest accountants employed to generate the required accounting information and the internal auditor primarily serves an internal control function, even though accounting expertise may be needed and additional accounting advice may be sought. This control function serves the corporation directly and only indirectly serves society Is the professional service indispensable to the public good? Public audits have been mandated by legally permit bodies, thus recognizing that they are considered essential to the public good by allocating resources to them.With the public demand for the control of fraud evidenced by the Foreign Corrupt Practices Act of 1977 internal auditors became more active as a means of internal control, and fraud detection that was part of the proposed solution to protect the public interest (Lambert and Hubbard, 1989). Internal auditors, in their professional capacity, may be asked to design internal control systems and to assist in the construct ion of corporate codes of ethics (Peacock and Palfrey, 1991), thus, serving as an integral part of the overall control system and by extension may be considered indispensable to the public good.Is internal auditors licensing sanctioned by the community? Referring to the previous argument some take aim of public sanction is implied. However, licensure implies self-assurance to license, 119 which must be granted by an authoritative body. In the case of Certified Public Accountants (CPA), state boards of accountancy are empowered by the respective legislatures to license public accountants practicing in the state. Internal auditors are not licensed by a legislative authority. Rather, they are certified by the Institute of Internal Auditors (IIA) upon successful period of an experience requirement and a qualifying exam.No authoritative body claims jurisdiction over their activities. Within the corporation, however, internal auditors have responsibilities defined by the corporation and authority granted by means of a charter. This internal authority granting charter should be signed by the executive management and by the audit overstretchtee representing the shareholders (Ratliff et al. , 1988). In the context of an internal, company specific activity, this can be construed as granting professional right to practice by admit authority.This is not however, an authority granted by society nor does it extend beyond the charter granting corporation. This is, at best, a limited type of licensure as no monopoly is granted and certification is not required. Is the internal auditor an independent practitioner serving individual clients? The issue of the charter for internal audit departments is particularly relevant to this discussion. Internal auditors turn within the corporation by right of a charter establishing their rights and responsibilities and granting them authority to function ( Johnson, 1986).The charter establishes the internal audit department as an in dependent function which enables the internal auditor to operate as an individual professional serving a client. Although the client in this case is the corporation, the required independence of attitude and function can be seen to qualify the internal auditor as an independent practitioner. Examination of the applicability of the six ancillary characteristics to internal auditors contributes to the resolution of the question of professionalism. The six ancillary characteristics are specifically included in the code of ethics genuine by the Institute of Internal Auditors.Thus, a preponderance of the characteristics, or cxx Mary Ann Reynolds punishments are structured to reward ethical behavior. Thus, the outcomes of professional behavior, whether moral or prudent, will enhance the public good. However, the Institute of Internal Auditors has chosen to emphasize high moral character. Article VIII of the IIA Code of ethics specifically states that internal auditors should be ever mi ndful of their obligation to maintain a high standard of morality. It is useful to examine ethical codes and try on identification of common themes or parts.A resemblance by Kultgen (1988) of the American connexion of University Professors American Bar Association American Institute of Certified Public Accountants American Medical Association American Psychological Association Engineers Council for Professional Development Institute of Electrical and Electronics Engineers and Sigma Delta Chi (Society of Professional Journalists) found a number of common elements. The common elements noted include loyalty to the client, employer, or institution avoidance of conflict of interest or bribery. Competence, objectivity and honestness about qualifications were also universal.Additional themes such as respect for the territorial rights of colleagues and professional self-monitoring were also widely evidenced. The lack of regulatory oversight allowing self-monitoring, or a professions co ntrol over its fragmentship and practice, is granted by society (Armstrong and Vincent, 1988). This ability to continue to be self regulated is one which the accounting profession in particular has vigorously defended. Another type of examination is provided by Harris and Reynolds (1992) with a specific comparison of the codes from various branches of the accounting profession.This detailed comparison of the codes also focuses on dilemmas inherent within the various codes as well as, among various directs of society. An examination of the code of the internal auditors in comparison to the code of the AICPA reveals useful insights. Elements listed in the eight articles of the internal audit code include honesty, objectivity, diligence, morality, dignity, organizational loyalty, independent mental attitude, competence, conformity to standards, confidentiality, skillful revealing, continuing education, nonacceptance of criteria, cited are applicable to internal auditors in their ow n right.It is therefore, logical to extend the classification of accountants as professionals to internal auditors as professionals. To just legitimate this claim the Institute of Internal Auditors was formed in New York City in 1941, standards were established and a Code of Ethics take thus implicitly reflecting their acceptance of their responsibility to society. Examination of the code of ethics adopted may also shed light on their claim to professional status. The following section examines their code and compares it in part to the code adopted by public accounting professionals through the AICPA.Ethical codes A comparison A professions mission and responsibility can be enunciated through the code of ethics to which it subscribes. Like other professions, internal auditors have developed and formally adopted a professional code. In the development of an ethical code there are two basic ethical viewpoints 1) moral, 2) prudent, which may be adopted. Kultgen (1988) in his work on professions, distinguishes between these two approaches as follows Moral persons recognize the intrinsic value of each member of the moral community merely prudent persons recognize only their own value and treat others as instrumentalitys. . . . Professional practices can be, examined from the moral point of view, asking how they contribute to, or detract from the aggregate contentment and fair distribution of goods in the moral community (1988, p. 32). Accountants are frequently viewed as utilitarian in approach and may thus be expected to choose the prudent approach. Examination of the AICPA code reveals that although the principles section in the introduction addresses moral components, the enforceable rules section of the code is predominantly a guide to practice. This is in contrast to the internal auditors code which is a guide to individual moral behavior.In a well organized society the rewards and Professionalism, Ethical Codes and the Internal Auditor gifts, and no comm ission of acts discreditable. This list encompasses both character attributes honesty, dignity, morality, loyalty, nonacceptance of gifts and no commission of acts discreditable and professional performance of duty attributes objectivity, independent mental attitude, competence, conformity to standards, and full disclosure. Thus, the code gives clear indication of the personal qualifications perceived to be essential to perform the requisite public service in an ethical manner.With the focus lay on loyalty, dignity and morality the assumption can be make that this institute adopts a moral, rather than a prudent, view of ethical behavior. The emphasis in the internal auditor ethical code reflects an individual level of ethical behavior and decision making. The factor of voluntary compliance further indicates an individual level of ethics. Note that internal auditors rank is voluntary and members personally choose to subscribe to the higher duty. There is no societal enforcement if this duty is not met, the only enforcement is forfeiture of social status and certification (Loeb, 1984).The contrast with the AICPA code of conduct shows the AICPA code to have a more institutional focus. Rather than the specification of individual moral characteristics, forms of practice are discussed. The ethical code can be seen as directed to the regular of accountants rather than to the individual per se. The new AICPA code, as adopted in 1988, states verificatory principles about appropriate professional conduct and is goal driven (Meigs et al. , 1989). In contrast to the Institute of Internal Auditors code, the AICPA code may be viewed as adopting a prudent, or instrumental, ethical view.The AICPA code preamble and article II both express the professions responsibilities to the public interest. Here again, membership is voluntary and members commit themselves to honor the public trust and maintain professional excellence. Elements of the code in support of this include ob jectivity, independence, scope and nature of services, compliance with standards, confidentiality, contingent fees, advertizing and other solicitation, incompatible occupations and form of practice and name. Mention is also make of integrity. Integrity, however, is seen in the 121 context of professional judgment.The professional, by this standard of integrity, must be independent, not knowingly misrepresent the facts and not subject his/her judgment to the judgment of others (AICPA, 1988). Again, the emphasis is on the professional performance of duties in the public field of honor and serving the public good. Further, Rule 501 enjoins members not to commit acts discreditable to the profession. Enforcement of the AICPA code takes several forms. Members can be censured by one of the designated review boards and membership in the AICPA revoked, the ability to practice before the SEC revoked, or the state license revoked.Licensure is granted by the state boards and revocation of the license goes through a state board procedure also. This constitutes a legal enforcement and the accountant would no longer be licensed to practice. Some of these contrasts between the AICPA and the IIA codes arise from structural differences. Namely, public auditors codes include structure of practice considerations such as advertising and contingent fees, and permissible immobile names that are not relevant to the internal auditor.Beyond structure, the basic difference evidenced is the AICPA emphasis on a practical, prudent, institutional approach, whereas the IIA emphasizes a moral and individual approach. This difference may in part reflect the varying degree of societal regulation within which the two groups operate. The societal regulation in turn may reflect the level of societal recognition and as internal auditing evolves and gains public recognition, regulation and possible licensing may follow. Examination of additional accounting professional codes provides further point s of comparison.The Institute of Internal Auditors (IIA) code is the only code to call explicitly for the maintenance of personal dignity. Some commonalties emerge however, as both the Government Financial Officers Association (GFOA) and the IIA included exercise of due care, or diligence, and loyalty to employer (Harris and Reynolds, 1992). Both the governmental financial accountants and the internal auditors function in an environment where they are working as professionals, but within an entity 122 Mary Ann Reynolds on the externally issued financial statements (Lambert and Hubbard, 1989).That the internal audit profession is seen as a significant player in the societal move to discourage fraud serves to legitimate their claim to professionalism. At the same time this may exacerbate conflicting loyalty problems. Clearly, the choice will fall on the internal auditor as an individual and it may be to this end that strong individual character has been emphasized in the IIA code. Th is conclusion follows from Kultgens statement that, a valid professional ethic, therefore, is critical for the moral development of the individual practitioner (1988, p. 12). Resolution of ethical conflicts requires that the internal auditor recognize sources of harm or conflict and have some guidance on appropriate response. Stanford (1991) recommends four sources of guidance. These are 1. the IIA Code of Ethics 2. the IIAs Standards for the Professional Practice of Internal Auditing 3. the IIAs position paper on sound blowing 4. consultation with peers. Ratliff (Ratliff et al. , 1988) also suggests that guidance will be found in both the Standards and the Code of Ethics and Wallace (1986) emphasizes that the standards and code go hand in hand to provide guidance.A recent study by Seigel, OShaughnessy and Rigsby (1995) confirms that practicing internal auditors report using the code of ethics to guide their judgment on ethical issues in the performance of their professional respon sibilities. Seigel et al. further conclude that the legal age of internal auditors consider the primary purpose of the ethical code is to provide guidance. Internal auditors are indeed being given a special task. In the organizational structure of the corporation if the internal auditors report to the audit committee, as recommended, management may perceive them as adversarial.If fraud or inefficiencies are discovered both professional ethics and personal moral judgment will be needed to resolve conflict. Conflict also arises within the code itself. There is a basic conflict juxtaposing disclosure and confidentiality and rather than independently in society. Thus the adjuration to loyalty to the employer is appropriate. Professional conflict resolution Guidelines The codes of ethics are adopted to provide guidance to the practicing professional. Kultgen (1988, p. 13) notes, . . . professionals, precisely as professionals, are confronted with serious conflicts of duty, and conflicts between duty and self-interest. mavin purpose for codes of ethics is to provide guidance for the resolution of conflict. The internal auditor faces possible conflict in the practice of his/her profession within an organization. Although independence, in theory, is established by the corporate charter and is required by the code, it may be difficult to achieve in practice. Internal auditors faced with choices that may not appear beneficial to upper management or the organization may find it difficult to maintain an objective disinterestedness. Loyalty, an explicit component of the ethical code, may also present conflicts.The internal auditor may face a conflict between loyalty to the profession and professional standards as they are articulated in the standards and the code of ethics, and his/her employer. The interest of the firm in presenting information may not always be harmonic with the interest of society to receive full disclosure of information as management seeks to prote ct strategic and proprietary information. Although internal auditors may be part of the management team they may also serve a control function on managerial activities, another source of strength conflict.Thus, even within the firm they may have conflicting loyalties (Lambert and Hubbard, 1989). Their obligation to the organization constrains them to safeguard the assets of corporation, minimize waste and inefficiency and watch for deliberate error and conflicts of interest (Verschoor, 1987). As a result of the Report of the National bursting charge of Fraudulent Financial reporting (Treadway Commission, 1987) there is an increasing responsibility for the internal auditor to be active in identifying fraud leading to poppycock misstatementProfessionalism, Ethical Codes and the Internal Auditor also loyalty and objectivity (see Harris and Reynolds, 1992, for a full discussion). Dilemmas arising from these juxtapositions are inherent in the statement of the code so the individual practitioner must ultimately turn to his/her own moral response for guidance and resolution. A further role suggested for the internal auditor is monitoring corporate codes of conduct. While this may well be an appropriate extension of internal auditors role it is in the nature of a consulting service not a professional accounting service.Indeed, as noted in the introduction, business ethics consultants are developing to advise organizations on ethical codes, problems and approaches to resolution (Dean, 1997). Internal auditors are well positioned to participate in this discussion, though it does not help to resolve the question of professionalism examined in this paper. 123 individual professional within a firm. The IIA code focuses on the morality and dignity of the individual and pushes code adherents toward the achievement of a professional ideal.Thus by noting the internal auditors development and use of a code of ethics, reviewing their relationship to the accounting professio n and examining their function in society, their claim to professional designation can be supported. The preponderance of the evidence supports their status as professionals. 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One purpose of professions codes of ethics is to legitimate the profession and publicize standards of conduct (Sawyer, 1991).Another is to provide guidance for ethical conflict resolution. The IIA Code of Ethics serves both of these purposes for its professional constituency. The code implicitly recognizes the responsibility extended to the profession by society. The code enjoins internal auditors to maintain both a high level of moral character and a high level of professional competence. As the role of internal auditors differs from the that of public auditors, so also their code differs. The AICPA is an institute that serves the public interest by monitoring the external exchange of financial information.Their code reflects the institutional perspective. The internal auditor practices as an 124 Mary Ann Reynolds and Techniques (The Institute of Internal Auditors, Altamont Sprin gs). Reynolds, M. A. 1989. 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