Executive Summary
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Every internal audit role should be established with a charter approved and reviewed annually at board level.
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The internal audit charter should describe the internal audit role in the organization it serves, including its purpose, authority, responsibility, and relationships with external organizations.
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The internal audit charter should be promoted across the organization at all levels and as appropriate across its supply chains and to its stakeholders.
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Internal audit should have measures in place to demonstrate its level of performance to the organization.
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Expectation gaps at organization and individual customer levels should be identified, and all performance measures continuously monitored if the full added value of the internal audit role is to be achieved.
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New dimensions of the internal audit role in an organization should be continuously explored to ensure that it is at the cutting edge of its professional attributes and in its performance.
Introduction
Establishing the internal audit role in any organization requires formality to ensure that it is understood not only by the board and management but also by its customers across the organization and, where necessary, those external to the organization. The internal audit assurance and consulting role should be explained clearly in a charter to minimize any expectation gaps at board and organization levels. When the role is being established, it is important that internal audit management should have an input into the formal process through discussion with the board and senior management.
The Institute of Internal Auditors (IIA), as the global professional body representing internal auditing in every country, has always recommended and now requires in its Standards 1 the purpose, authority and responsibility of an internal audit activity to be formally approved and kept under review at the highest level in an organization”. In some sectors this may also be a requirement of one or more of an organization’s stakeholders, such as government or a sector’s regulator.
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