The Internal Audit Charter: A Blueprint for a Strong Internal Audit Foundation

An internal audit charter outlines the purpose, authority, responsibilities, and scope of an organization’s internal audit function. It is a foundational document crucial for the effectiveness and success of an organization’s internal audit function. The internal audit charter can serve as a blueprint for the internal audit function, guiding its operations, enhancing its credibility, and contributing significantly to the organization’s overall governance, risk management, and internal control processes. 

An effective IA charter can support the internal audit function’s independence, objectivity, and effectiveness, while also communicating why internal audit exists, its objectives, scope, and responsibilities. By formalizing these essential elements, the IA charter provides a framework and structure for the organization’s internal audit function. It defines the role of internal audit in assessing and enhancing organizational governance, risk management, and control processes.

Clear Understanding of Internal Audit’s Role in Achieving Goals

Working with organizations of all sizes and across all sectors, we have seen how organizations benefit from adopting and implementing an internal audit charter. The charter establishes a clear understanding of the internal audit’s role, fostering transparency and alignment with the organization’s goals.

This clarity helps focus audit efforts on key risk areas, ensuring the allocation of resources to areas of utmost importance. The charter supports compliance efforts by defining the standards, methodologies, and practices to be adopted by the function, enhancing consistency and quality in internal audit operations and output.

We recommend that once approved by the Board of Directors (or the Audit Committee or similar body within the Board of Directors) and management, the charter should be reviewed and updated annually to reflect leading internal audit practices and changes within the organization.

The sample internal audit charter can be customized for your organization.

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