The Contents of an Audit Charter

An internal audit is an independent activity and should ideally be reported to a board-level committee. In most organizations, the internal audit function reports to the audit committee of the board. This helps to protect the independence of the audit function. Audit reporting may be biased in the absence of an independent audit function.

The independence of the audit function is further ensured through a management-approved audit charter.

The following figure shows the features of an audit charter:

Figure 1.3: Features of an audit charter

The CISA candidate should note the following features of the audit charter:

• An audit charter is a formal document defining the internal audit’s objective, authority, and responsibility. The audit charter covers the entire scope of audit activities. An audit charter must be approved by senior management.
• An audit charter should not be changed too often as it defines...