Internal Audit Charter

Internal Audit Charter

Internal Audit Charter


When it comes to an internal audit, one of the most important documents you’ll need is the internal audit charter. This document lays out the parameters for your internal audit and ensures that everyone is on the same page when it comes to what you’re trying to achieve.

Unfortunately, creating an effective internal audit charter can be a daunting task. There are a lot of factors to consider, and it’s easy to get bogged down in the details. That’s why we’ve put together this guide to help you craft an internal audit charter that’s right for your business.

Certified Professional Internal Auditor – CPIA (USA)

What Is an Internal Audit Charter?

An internal audit charter is a document that provides the high-level framework for an organization’s internal audit activity. It outlines the authority, responsibility, and independence of the internal audit function.

The charter is important because it ensures that the internal audit activity is aligned with the organization’s overall risk management strategy. It also helps to ensure that the internal audit function operates in an effective and efficient manner.

Why Is an Internal Audit Charter Necessary?

An internal audit charter is a document that formally authorizes and governs the internal audit activity. It provides the framework for how the internal audit activity will be conducted, aligned with the organization’s risk management strategy.

Some of the key benefits of having an internal audit charter include:

  • It helps ensure that the internal audit activity is conducted in a consistent, effective, and efficient manner
  • It establishes the authority and responsibility of the internal audit activity
  • It ensures that the internal audit activity is adequately resourced
  • It outlines the reporting lines for the internal audit activity

Establishing Objectives and Scope of Work

Once you have decided to conduct an internal audit, you need to establish the objectives and scope of work. This will define the limits of the audit and guide the internal auditor in conducting the audit.

The objectives of the audit should be specific, measurable, achievable, relevant, and time-bound. They should also be aligned with the company’s strategic objectives. The scope of work should be based on the objectives of the audit and should be limited to those areas. The auditor should avoid going beyond the defined scope of work, as it will not be a feasible task to complete and could affect the quality of the audit.

Designation of Responsibilities for the Internal Audit Function

You will need to designate responsibilities for the internal audit function in your charter. This includes specifying who will direct the internal audit function and how they will report to senior management and the board.

The person designated to direct the internal audit function must have adequate independence, objectivity, and expertise. They should be free from conflicts of interest and answer only to the board or a board committee.

The charter should also specify how resources will be allocated to the internal audit function. This includes specifying the budget, staff, and any other resources that will be made available to support the function.

Setting the Frequency and Detail of Reporting Requirements

One of the most important aspects of your internal audit charter is setting the frequency and detail of reporting requirements. After all, if you’re not getting timely and accurate reports, then what’s the point?

There are a few things to keep in mind when setting these requirements. First, you’ll need to decide how often you want reports. This will depend on factors like the size and complexity of your organization, as well as the nature of your business.

Next, you’ll need to decide what information should be included in the reports. This will include financial statements, operational data, and compliance information.

Finally, you’ll need to set a format for the reports. This can be anything from a simple email to a more formal report. Regardless of the format, you should make sure that the reports are easy to read and understand.

Quality Assurance and Improvement Programs

Your internal audit charter should also include a section on quality assurance and improvement programs. This is important because it demonstrates your commitment to continual improvement, which is a key principle of any good charter.

There are a few things you should keep in mind when crafting this section:

  • First, make sure you have a clear and concise statement of your commitment to quality. This might seem like a no-brainer, but it’s important to be clear about your intentions.
  • Second, lay out what your quality assurance and improvement programs will entail. This could include things like regular reviews of your internal audit process, training for auditors, and feedback from stakeholders.
  • Finally, establish how you will measure the effectiveness of your quality assurance and improvement programs. This could involve setting targets for things like reduced audit findings, improved stakeholder satisfaction, or shorter audit cycle times.


So, there you have it. Everything you need to know about crafting an effective Charter. By following these simple steps, you can create a Charter that will help your Internal Audit team achieve success. Good luck!

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