Empowerment and Expectations
In some organizations, internal auditing is not widely recognized for its invaluable role. It is critical that audit customers throughout the organization understand the value that internal auditors can bring to their operations by identifying opportunities for enhancing efficiencies and effectiveness. The audit committee, in concert with executive management, can play a critical role in empowering and elevating the image of the internal audit activity, ensuring that it is not misunderstood. By routinely communicating its value throughout the organization, those at the top can and should promote the importance of the internal audit activity. They can position the function as fully empowered to provide a critical check for management, to be a knowledgeable provider of assurance and a revered consultant,
and to add value to the organization’s governance, risk management, and internal control processes.
10-point Oversight Checklist
To provide adequate oversight of internal auditing, an audit committee should ensure the following:
1. The audit committee engages in an open, transparent relationship with the chief audit executive (CAE).
2. The audit committee reviews and approves the internal audit charter annually.
3. A s a result of discussions with the CAE , the audit committee has a clear understanding of the strengths and weaknesses of the organization’s internal control and risk management systems.
4. The internal audit activity is sufficiently resourced with competent, objective internal audit professionals to carry out the internal audit plan, which has been reviewed and approved by the audit committee.
5. The internal audit activity is empowered to be independent by its appropriate reporting relationships to executive management and the audit committee.
6. The audit committee addresses with the CAE all issues related to internal audit independence and objectivity.
7. The internal audit activity is quality oriented, and has in place a Quality Assurance and Improvement Program.
8. The audit committee regularly communicates with the chief audit executive about the performance and improvement of the CAE and the internal audit activity.
9. Internal audit reports are actionable, and audit recommendations and/or other improvements are satisfactorily implemented by management.
10.The audit committee meets periodically with the CAE without the presence of management.
In some organizations, internal auditing is not widely recognized for its invaluable role. It is critical that audit customers throughout the organization understand the value that internal auditors can bring to their operations by identifying opportunities for enhancing efficiencies and effectiveness. The audit committee, in concert with executive management, can play a critical role in empowering and elevating the image of the internal audit activity, ensuring that it is not misunderstood. By routinely communicating its value throughout the organization, those at the top can and should promote the importance of the internal audit activity. They can position the function as fully empowered to provide a critical check for management, to be a knowledgeable provider of assurance and a revered consultant,
and to add value to the organization’s governance, risk management, and internal control processes.
10-point Oversight Checklist
To provide adequate oversight of internal auditing, an audit committee should ensure the following:
1. The audit committee engages in an open, transparent relationship with the chief audit executive (CAE).
2. The audit committee reviews and approves the internal audit charter annually.
3. A s a result of discussions with the CAE , the audit committee has a clear understanding of the strengths and weaknesses of the organization’s internal control and risk management systems.
4. The internal audit activity is sufficiently resourced with competent, objective internal audit professionals to carry out the internal audit plan, which has been reviewed and approved by the audit committee.
5. The internal audit activity is empowered to be independent by its appropriate reporting relationships to executive management and the audit committee.
6. The audit committee addresses with the CAE all issues related to internal audit independence and objectivity.
7. The internal audit activity is quality oriented, and has in place a Quality Assurance and Improvement Program.
8. The audit committee regularly communicates with the chief audit executive about the performance and improvement of the CAE and the internal audit activity.
9. Internal audit reports are actionable, and audit recommendations and/or other improvements are satisfactorily implemented by management.
10.The audit committee meets periodically with the CAE without the presence of management.
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