The Contents of an Audit Charter

An audit charter is a formal document that outlines the purpose, authority, scope, and objectives of an audit department. Consider it like a search warrant issued by a board of directors/audit commitee. Just like how a search warrant gives police permission to look for evidence in specific places, the audit plan gives auditors the permission and direction to look at specific parts of a company’s systems and processes. An auditor’s activities are impacted by the charter of the audit department, and it authorizes the accountability and responsibility of the entire audit department. In the absence of an approved charter, the auditee may hardly acknowledge the existence of the audit team.

Figure 1.2: An audit charter needs the support of the auditee

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...