Executive Summary
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Internal audit’s raison d’être is to provide assurance on the effectiveness of the management and control of significant risks.
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Assurance can only ever be reasonable but not absolute—continuing corporate failure due to inadequate risk management and control challenges the value of such reasonable assurance.
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Chief audit executives can use objective criteria to demonstrate the integrity of their reasonable assurance propositions.
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Objective criteria include completeness, frequency, future orientation, explicitness, objectivity, and subject matter knowledge.
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A key challenge for CAEs is that of a shift of mindset away from just doing audits, to auditing actually providing assurance of demonstrable integrity.
Introduction
Looking back over the last 15 to 20 years, it does seem that at one time the biggest challenge facing the profession of internal auditing was whether the unique scope and contribution of internal audit was clearly defined, understood, or indeed actually needed. Much of the thought leadership around internal auditing in recent years has focused on this challenge. Two publications by PricewaterhouseCoopers in 2007,1 and a heads of internal audit summit “The Future of Internal Auditing Starts Here” in May 20082 jointly facilitated by the Institute of Internal Auditors and Deloitte, have all concluded that internal audit’s primary role is clearly to provide assurance on the effectiveness of risk management. In fact, in many organizations internal audit already clearly does this, as demonstrated in Protiviti’s June 2007 publication Internal Auditing Around the World.3 It is clear—and has been since Turnbull (1999),4 if not before—that boards have a duty to get themselves assured on the effectiveness of their systems of internal control. There is no doubt that chief audit executives see that their raison d’être is to provide such assurance, and many will claim, with some justification, that they have provided and will continue to provide this assurance. Therefore, on the face of it, CAEs have responded to their most fundamental challenge.
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