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Why your internal audit charter is important

A blog by our EQA review team | 28 August 2017

The Chartered IIA undertakes external quality assessments across a range of organisations. Each year an analysis of the outcomes from this work is carried out. This year’s results have highlighted opportunities for improvement across internal audit functions and one of the areas identified for improvement is the internal audit charter. The EQA results have identified a need to ensure that ' ... internal audit charters reflect the full range of services, roles and responsibilities provided to the organisation ...'

The internal audit charter is a formal document that defines internal audit’s purpose, authority, responsibility and position within the organisation. The charter should set out the nature of services that internal audit will provide and how internal audit will help the organisation to achieve its objectives. Having a charter establishes the internal audit activity’s position within the organisation, including the head of internal audit’s reporting lines, access to records, people and property, and the scope of its activities. 

What should be included in the charter?

  • Mission – the purpose and function of the internal audit activity
  • Objectives – the provision and nature of assurance activities and (possibly) consulting activities
  • Role and scope of work
  • Independence - how is independence established and maintained
  • Access – unrestricted to records, personnel and physical property
  • Reporting – reporting lines to show independence
  • Responsibilities – don’t forget other roles such as responsibility for fraud investigations
  • Planning – approach to planning, resources and budgets
  • Quality – arrangements for quality assurance and improvement programme

It is a key benchmarking tool against which the organisation can measure the effectiveness of internal audit. It can also act as a service level agreement with the board or audit committee so that there is a clear understanding of the role, purpose and position of internal audit within the organisation and the scope and nature of its work.

The charter needs to be reviewed periodically and approved by the board especially if any changes occur within the function. 

Don’t forget to review it for any changes that may be required to reflect the recent changes to the IPPF including the International Standards, the mission of internal audit, the core principles, the code of ethics and the definition of internal auditing.

If you need help to prepare a charter or would like to review your existing charter – the IIA Global has recently published a model internal audit activity charter

Further reading

What is an internal audit charter?

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Content reviewed: 1 February 2023