Interpretation of Standard 1000

  • This topic has 6 replies, 2 voices, and was last updated 1 year ago by Brian Hock.
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  • #220309

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    This forum is restricted to members of the associated course(s).

    Shoaib Ahmed
    Participant

    The internal audit charter establishes the internal audit activity’s position within the organization, including the nature of the chief audit executive’s functional reporting relationship with the board; authorizes access to records, personnel, and physical properties relevant to the performance of engagements; and defines the scope of internal audit activities.

    Can you please explain the following:

    “the nature of the chief audit executive’s functional reporting relationship with the board.”
    “personnel, and physical properties relevant to the performance of engagements.”

    Further, as Internal Audit provides consulting services to organisation and the consulting activities can be different according to circumstances of organisation, so can you please explain how they define the scope with respect to consultancy in charter?

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  • #220311

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    Brian Hock
    HOCK international

    “the nature of the chief audit executive’s functional reporting relationship with the board.” means what and when and how often the CAE reports to the board. It sets the requirements and expectations for the reporting that the CAE will do.

    The phrase ““personnel, and physical properties relevant to the performance of engagements.” needs to be read together with the start of the sentence. The Charter provides the authorization for the IAA to access the personnel (employees), and any of the physical property and locations that are relevant to the work that the IAA is doing.

    In respect to consultancy engagements, the Charter needs to provide the authority for the IAA to perform Consulting Engagements. In the Model Charter, it states this:

    “Performing consulting and advisory services related to governance, risk management and control as appropriate for the organization.”

    This sets Consulting engagements that are connected to governance, risk management and control as able to be done. If they wanted to limit that, or expand, that it would need to be done in the Charter.

    #220313

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    Shoaib Ahmed
    Participant

    Thanks for your prompt response. With respect to your answer related to Consultancy arrangement, what I understand is it depends upon the Internal Audit Head that whether they need to define the activities of consultancy in Charter or keep it general as mentioned in Model Charter.

    #220314

    This forum is restricted to members of the associated course(s).

    Brian Hock
    HOCK international

    It will depend not only on the CAE, but also the Board and what scope of consulting engagements the Board wants to allow the IAA to perform. Yes, the CAE will be a large part of this process, but it is the Board that is providing the Charter, so it depends on them in the end.

    #220485

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    Shoaib Ahmed
    Participant

    What must be the contents of Internal Audit Charter?

    #220487

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    Shoaib Ahmed
    Participant

    Whether internal audit must maintain minutes of the meeting in which board has agreed and approved the charter? and if yes, then what is the duration of maintain the record?

    #220488

    This forum is restricted to members of the associated course(s).

    Brian Hock
    HOCK international

    Shoaib,

    The contents of what should be in the Charter is covered in the Textbook starting on Page 10.

    A full model Charter can be downloaded here:

    https://global.theiia.org/standards-guidance/public%20documents/modelcharter.pdf

    In terms of keeping the minutes of the board meting in which the Charter is approved. I do not think that this would be the IAA that needs to do this. These minutes would be kept as part of the record of Board meetings kept by the company.

    Brian

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