1000 – Purpose, Authority, and Responsibility
The purpose, authority, and responsibility of the internal audit activity must be formally defined in an internal audit charter, consistent with the Mission of Internal Audits and the mandatory elements of the International Professional Practices Framework (the Core Principles for the Professional Practice of Internal Auditing, the Code of Ethics, the Standards, and the Definition of Internal Auditing). The chief audit executive must periodically review the internal audit charter and present it to senior management and the board for approval.
Interpretation:
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.
1000.A1 – The nature of assurance services provided to the organization must be defined in the internal audit charter. If assurances are to be provided to parties outside the organization, the nature of these assurances must also be defined in the internal audit charter.
1000.C1 – The nature of consulting services must be defined in the internal audit charter.
1010 – Recognizing Mandatory Guidance in the Internal Audit Charter
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.
SIAAB Requirements:
All State of Illinois internal audit organizations are required to also adhere to FCIAA requirements and as a result the internal audit charter must also be consistent with current requirements of FCIAA.
The chief internal auditors (IIA - chief audit executives) must review the internal audit charter on a periodic basis to ensure that it appropriately reflects the purpose, authority, and responsibility of the internal audit function and obtain the chief executive officer’s, and the board’s, if applicable, approval whenever significant changes are made.
From: The IIA’s International Professional Practices Framework Copyright 2017 by The Institute of Internal Auditors, Inc., 1035 Greenwood Blvd, Suite 401, Lake Mary, FL 32746. Reprinted with permission.
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