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Practical Strategies For Auditors To
Manage Conflict Of Interest Situations
Organizations need to define what constitutes a
conflict of interest and communicate that such
conflicts are not allowed. Organizations can
do this by adopting an ethics policy, defining
organizational values, establishing behavioural
principles, or simply notifying employees.
These conflicts not only affect internal auditors –
who are expected to follow The IIA’s Code of Ethics
Manoj Sharma and uphold the principles of integrity, objectivity,
Vice President, TKIL Industries Pvt Ltd confidentiality, and competency – but all employees
of the organization. The challenge is that conflicts
Manoj.sharma@tkil.com of interest can be difficult to identify, manage, and
audit.
Practical strategies for auditors to recognize,
disclose, and manage conflict of interest while An internal auditor who holds a position of trust
maintaining independence yet has conflicting personal or professional interests
is said to have a conflict of interest. It may be
Maintaining ethical integrity and making wise challenging to carry out his or her responsibilities
decisions in the complicated world of contemporary impartially when faced with conflicting interests.
organizations requires striking a careful balance Even if there is no unethical or improper act, there
when handling conflicts of interest. Decision- is still a conflict of interest.
making procedures and workplace ethics can be
greatly impacted by these conflicts, which arise Confidence in the internal auditor, the internal
when personal and professional interests collide. audit activity, and the profession may be weakened
by the impression of improper behaviour caused
Under the surface, conflicts of interest can cause by a conflict of interest. An individual’s capacity
moral quandaries and impair judgment in any to carry out their obligations and responsibilities
organization. A thorough conflict of interest policy impartially may be hampered by a conflict of
acts as a cornerstone, directing moral behaviour. interest.
Effective conflict management involves more
than just following the regulations; it also entails Standard 1130 deals with the necessity of handling
creating an atmosphere where openness and any impairment of independence or objectivity.
moral rectitude are ingrained in the very fabric of If independence or objectivity is compromised in
the company culture. appearance or actuality, the relevant parties must
be informed of the impairment. The impairment
In the course of business, conflicts of interest are will determine the type of disclosure.
likely to arise. This does not automatically mean
that the organization and its employees are doing Personal conflicts of interest, scope limitations,
something wrong. The issues are whether the restrictions on access to data, staff, and properties,
organization is mature enough to recognize these and resource limitations, such as money, are a few
situations and has developed mechanisms to examples of factors that might impair organisational
address them. independence and individual objectivity.
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