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Charities – do you have an effective internal audit function?

A blog by our EQA review team | 9 October 2017

Over recent years, media attention on charities has increased with good governance and fundraising practices in the spotlight.  The Charity Governance Code, launched in July 2017, sets out a revised set of governance standards for the sector. 

In this landscape, the importance of an effective internal audit function has never been more important. However, under austerity, charitable funds are under more pressure than ever before. 

For heads of internal audit (HIAs) it can be difficult to secure the budget to invest in an external quality review (EQA) every 5 years as required by the IPPF (Standard 1312 External Assessments). The institute’s EQA service is very experienced at undertaking reviews in the sector, but when little or no budget is available there are other options to consider. 

Some charities opt for peer reviews. We often see HIAs link up with their immediate network, with whom they frequently share ideas and issues. In these circumstances, there tends to be limited challenge and fresh ideas. 

It is worth instead seeking a more neutral partner organisation that operates in a different sphere, and are more likely to offer challenge and fresh insights. It also worthwhile having a neutral facilitator, perhaps from the external auditors, who is not affiliated to either organisation and can set the overall framework. 

Charity trustees could be another source of resource.  Many audit committee chairs have internal audit functions in their own commercial organisations and their staff may be well placed to undertake an EQA in a voluntary capacity or play the role of facilitator in a peer review.

EQAs are a great opportunity to stand back, reflect and chart the way forward, so through whatever means, it is also a worthwhile endeavour.

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Further reading

Implementation Guide 1312 External Assessment

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Content reviewed: 1 February 2023