CIA 1.8: Internal Audit Charter Flashcards
What does the IA Charter define?
The internal audit charter is a formal document that defines the internal audit activity’s purpose, authority, and responsibility. The internal audit charter establishes the internal audit activity’s position within the organization, including the nature of the chief audit executive’s functional reporting relationship with the board; authorizes access to records, personnel, and physical properties relevant to the performance of engagements; and defines the scope of internal audit activities. Final approval of the internal audit charter resides with the board.
Can an auditee place a audit scope limitation?
An auditee must not be able to place a scope limitation on the internal audit activity by refusing to make relevant records, personnel, and physical properties available to the internal auditors.
What must engagement clients be informed of?
Engagement clients must be informed of the internal audit activity’s purpose, authority, and responsibility to prevent misunderstandings about access to records and personnel.
What must the CAE understand in order to create an IA charter?
“To create [the internal audit charter], the chief audit executive (CAE) must understand the Mission of Internal Audit and the mandatory elements of The IIA’s International Professional Practices Framework (IPPF) — including the Core Principles for the Professional Practice of Internal Auditing, the Code of Ethics, the International Standards for the Professional Practice of Internal Auditing, and the Definition of Internal Auditing.
What happens once a charter has been drafted?
Once drafted, the proposed internal audit charter should be discussed with senior management and the board to confirm that it accurately describes the agreed-upon role and expectations or to identify desired changes. Once the draft has been accepted, the CAE formally presents it during a board meeting to be discussed and approve.
The minutes of the board meetings during which the CAE initially discusses and then formally presents the internal audit charter provide documentation of conformance. In addition, the CAE retains the approved charter.”
What must a charter define?
The charter must define the nature of assurance and consulting services provided by the internal audit activity. If assurance services are provided to parties outside of the organization, the nature of these assurances must also be defined in the internal audit charter. The nature of consulting services must also be defined in the internal audit charter.
What part must a charter refer to?
The mandatory nature of the Core Principles for the Professional Practice of Internal Auditing, the Code of Ethics, the Standards, and the Definition of Internal Auditing must be recognized in the internal audit charter. The chief audit executive should discuss the Mission of Internal Audit and the mandatory elements of the International Professional Practices Framework with senior management and the board.
