The relationship between the audit committee and board of directors is an important one. It sets the tone-at-the-top for the rest of the organization and influences other important aspects of the company.
The audit committee is a separately chartered committee of the board of directors. The audit committee has a direct relationship with the board of directors as it reports to the board on a quarterly or more frequent basis on such things as audit plans, audit findings and other items deemed to be significant.
The role of the audit committee has significantly expanded in recent years. Realizing this, the board of directors has begun to shift some of the audit committee’s responsibilities to separately chartered committees to create a balance of duties and ensure they are effectively executed. These additional committees have often included a compensation committee, disclosure committee, and nominating and governance committee.
Select one of the areas below to view a sample of audit committee and board or directors information available on KnowledgeLeader.
Audit Committee Charter - Example 5
Audit committees assist the board in monitoring the integrity of the financial statements, external auditor qualifications, performance of the internal audit function and external auditors, and company’s compliance with regulatory requirements. This charter provides one example.
Audit Committee Charter - Example 8
The purpose of the Audit Committee is to assist the board in overseeing the reliability of the company’s financial statements; compliance with legal and regulatory requirements; external auditor independence; internal audit function performance; and business practices and ethical standards. This charter serves as an example document outlining this committee’s various responsibilities.
Audit Committee Reports: Sample Presentations
Each of these four samples contains an audit committee report that has been presented by internal auditors at a target company. The report content primarily focuses on presenting the audit risk assessment process and results, the internal audit planning process and timing, and the business self-assessment processes and results.
Audit Committee Self-Assessment Checklist
The self-assessment process is an important exercise for audit committees to complete as they are responsible for important activities such as the quality and integrity of a company’s accounting practices and controls and compliance with legal and regulatory requirements. This is a sample self-assessment checklist for audit committees to use when evaluating their current involvement in a company’s control environment.
Board Of Directors Authority Charter, Checklist, and Matrix
This sample Board of Directors authority charter can be used to assist board members, management, and internal audit directors to establish clear attributes of authority to better manage the governance process. The charter includes an activities checklist and an authority matrix for specific areas.
Chief Audit Executive IT Control Checklist
Chief Audit Executives can use this checklist to examine their IT control framework to ensure the organization has addressed all control elements. The checklist can help the CAE understand the issues and plan for full internal audit coverage of the control areas.
Control Environment Audit Work Program
This audit work program focuses on the control environment component of the COSO Framework. Sample risks addressed in this audit work program include: a code of conduct and other policies does not exist regarding acceptable business practices, conflicts of interest, or expected standards of ethical and moral behaviour; adequate staffing levels are not maintained to effectively perform required tasks; and an independent governing body that provides oversight for management's activities does not exist.
Corporate Governance: Relationship with Internal Auditors
The purpose of this policy is to establish reporting relationships for the internal auditors of the company. Both internal and external auditors, by the nature of their work, have a special relationship with the board of directors. This policy spells out particular reporting relationships to ensure that appropriate governance can be applied.
Disclosure Committee Questionnaire
The purpose of this questionnaire is to ensure that all necessary quarterly financial reporting disclosures are addressed, and any changes to these disclosures are explained by management.
Entity Level Controls - Control Environment Questionnaire
The control environment provides an atmosphere in which people conduct their activities and carry out their control responsibilities. It is the foundation for all other components of internal control, providing discipline and structure. This excel-based template provides a number of COSO elements and the related control objectives for entity level controls. Within the questionnaire you can document items such as whether the control exists; whether it was designed properly; related test procedures; and management action plan for deficiencies. The following sections have been updated in this questionnaire: Integrity & Ethical Values, Commitment to Competence, Board of Directors or Audit Committee, Organizational Structure, Assignment of Authority & Responsibility.
Internal Audit Reporting: Impact and Clarity: Guide and Example
Effective Internal Audit reports and communications are a critical aspect of the audit process. Strong reporting is more than just appearance, and should be a reflection of the audit approach, performance, and organizational governance objectives. This guide provides practical advice for audit reporting, and includes an example report to the Audit Committee.
Job Description: Vice President Internal Audit/Chief Audit Executive
This job description provides an overview of responsibilities and the qualifications for the vice president internal audit/chief audit executive position.
Job Description: Vice President, Corporate Audit
This sample job description outlines the roles and responsibilities for the position of a Vice President, Corporate Audit. This description focuses on overseeing the development of an internal audit plan; supervising the evaluation and testing of internal controls; and reviewing the implementation of new systems and procedures to guarantee the adequacy of internal controls.
Monitoring Audit Work Program - Example 2
This audit work program focuses on the monitoring component of the COSO Framework. Sample risks addressed in this audit work program include: internal and/or external audit comments and management responses are not provided to the audit committee or board of directors and internal audit does not have the authority to review any aspect of the entity's operations.
Relationship with External Auditors Policy
This policy outlines the relationship between a company and its external auditors. This document also discusses the importance of providing external auditors adequate information and other related company responsibilities.
Risk Assessment Audit Work Program
This audit work program focuses on the risk assessment component of the COSO framework. Sample risks addressed in this audit work program include: management does not have a business planning process in place that examines existing objectives and establishes new objectives when necessary; senior management does not develop plans to mitigate significant identified risks; and changes in risks are not identified in a timely manner.
Strategic Internal Audit Plan
This document is a template to be used by Internal Audit when developing an annual audit plan. This sample template provides areas to document the planning approach; major projects and associated timelines; and project sponsors.
25 ‘Worst Practices’ in Educating the Audit Committee: What Not to Do
In these uncertain times, profits are being challenged, everyone is clamoring for more oversight, the control environment is threatened as layoffs grow, and IT has a whole new set of risks. With this backdrop, the relationship between the chief audit executive and audit committee has never been more important. The communication must be open, continual, pertinent and timely. To explain how to do this, consider first some thoughts on how not to do it.
2008 Mainland China and HK IA Capabilities and Needs Survey
This survey, Protiviti China’s first on internal audit competency and needs, was conducted from July to December 2007. A total of 172 respondents submitted completed surveys. The survey consisted of a series of questions grouped into three divisions: General Technical Knowledge, Audit Process Knowledge, and Personal Skills and Capabilities. Participants were asked to respond to 90 questions, each with two parts (rating their capabilities and indicating whether each capability was adequate or still needed to be improved). The purpose of the survey was to elicit responses that would illuminate the current perceived levels of competency in the many skills necessary to internal auditors, and determine which knowledge areas are most in need of improvement.
2009 Internal Audit Capabilities and Needs Survey
Protiviti’s third annual survey, found that internal auditors are looking more seriously at competencies tied to greater transparency in enterprise-wide operations and processes as well as clear and consistent views of key objectives and strategies by boards and their internal audit functions. These competencies include: ERM; Fraud monitoring, Detection and Prevention; Continuous Auditing and Computer-Assisted Audit Techniques; and Developing Relationships with other Board Committee Members. The survey was designed to gauge how internal audit professionals perceive their present capabilities, where they currently see need for improvement, and how they prioritize those needs.
Audit Committee Briefing – Internal Audit Standards: Why They Matter
Commonly, and in best-practice organizations, internal auditing has a direct reporting line to the audit committee. This publication explains how internal audit activities that adhere to the Standards and Code of Ethics can help audit committees comply with their own charters and regulatory responsibilities. In addition, this briefing provides guidelines for the relationship between audit committees and internal auditors.
Audit Committee Overload
Recent developments have resulted in an increase of the workload borne by the public company audit committee who is finding itself filling a litany of new roles. At the sixth annual Foley & Lardner LLP National Directors Institute held in Chicago, Illinois, "Audit Committee Overload" was featured and participants examined ways in which audit committees can effectively manage new and growing responsibilities.
The Biggest Internal Audit Challenges in the Next Five Years
In this current environment, internal auditors are playing - and will continue playing - a vital and growing role in monitoring and helping improve organization-wide systems, processes and controls. Interestingly, the April 2009 MIS SuperStrategies conference in Las Vegas, included a panel discussion focused on "Internal Audit and its Formidable Challenges." One question in particular grabbed the panel’s attention, sparked lively discussion and became the basis for this article: What do you think are the greatest challenges in the next three to five years?
Can Internal Audit be too Compliance-Focused?
Contrary to popular belief (or perhaps practice), SOX is not the Holy Grail for internal audit (IA). Is it possible IA has become too focused on SOX? More specifically, is too much attention being paid to internal control over financial reporting, or reliability of financial reporting under the COSO model? In this publication, Protiviti’s Bob Hirth explores a number of questions to gain a perspective on what IA’s role should be when it comes to compliance.
The Elephant in the Room – Understanding the Audit Challenges of Project Risk
The value of internal audit as a critical component of corporate governance and risk management is an undisputed fact. However, within an increasing audit universe, there is an elephant in the room that often escapes notice during the audit planning process but can have significant implications for the business if left unaddressed. Part one of this two part series, introduces this elephant: the need for oversight and monitoring of project risk. The final part of the series discusses what traps to avoid when reviewing project risk and internal audit’s growing role in this area.
Executive Presence: Increase audit effectiveness, build leadership potential
While choosing the right suit can help build a person’s confidence, it takes more than that to build credibility, authority, and trust – all qualities vital to effective internal auditors. It demands a combination of external and internal qualities that can be characterized as "executive presence." In this article, Ann Butera, from The Whole Person Project, Inc., describes the qualities that increase executive presence and its lasting value.
Discovery Risk Management: Why Chief Audit Executives need to ensure Management and the Board care
Lawsuits and governmental investigations have been a reality in corporate America for a very long time. However, the changing legal landscape has dramatically raised the stakes for companies. Given these new regulations and their implications, it is important for chief audit executives to understand the new requirements, and ensure that management and the board consider appropriate measures to address them.
Important Dialogue between CAEs and Audit Committee Chairs
There is plenty to talk about when CAEs and audit committee chairs get together—but they rarely have the opportunity to do so. In this article, Protiviti’s Greg Hedges summarizes the key themes resulting from such dialogue at a 2007 CAE and audit committee roundtable. The participants discussed topics such as ERM and the role of internal audit; project-to-process initiatives; rebalancing internal audit priorities; and completing QARs.
Internal audit moves in step with Bank Mandiri to be the regional champion
Bank Mandiri is the largest bank in Indonesia, and is the result of a 1999 merger of four state-owned banks. In this profile, Ogi Prastomiyono, the former chief audit executive, and Riyani T. Bondan, the current chief audit executive, discuss the key changes this organization has recently experienced. Prastomiyono and Bondan also describe internal audit’s role in the change management process.
Internal Auditing Around the World
Protiviti’s publication Internal Auditing Around the World - Volume V continues to detail internal audit best practices, processes and strategies being employed at some of the world’s most successful companies. These 11 companies represent different regions, industries and markets. They are highly successful international companies undergoing significant changes, such as restructuring, mergers and acquisitions, and industry transformation. As detailed in this publication, these organizations have not only adapted successfully, but that they also have uncovered many untapped opportunities.
The Global 50 – Perspectives of Leading Audit Committee Chairs
Recognizing the growing importance of audit committees, Spencer Stuart invited 50 global companies to participate in a discussion of the major challenges and issues being faced by audit committees. This publication explores key issues and best practices identified by this experienced group of audit committee chairs.
Guide to Internal Audit
This internal audit guide is designed to be a helpful and easy-to-access resource that internal audit professionals can refer to regularly in their jobs. The 90 questions and answers will assist those planning to develop a function. The booklet provides guidance on issues ranging from roles and reporting structures to risk assessments, and management’s responsibilities. Eleven appendices include samples and additional information. This guide has now been updated to reflect the SEC’s interpretive guidance on Section 404 of the Sarbanes-Oxley Act, PCAOB Auditing Standard No. 5, and other timely matters for internal auditors.
Management and Audit Committee Considerations
This section of Protiviti's "Guide to Internal Audit" addresses common questions concerning management and oversight of the audit function. Some of the topics covered are: How can management utilize internal audit most effectively? What is an audit committee’s role with respect to an internal audit function? What should internal audit report to the audit committee? And, what is the role of the audit committee in evaluating the role of the external auditor?
Managing Internal Audit Cost, Effectiveness and Performance
In Singapore, good corporate governance requires that cost is not the only consideration behind the level of internal audit resourcing. The benefits of a broad, risk-based internal audit program need to receive a fair hearing in this environment. The final part of this two-part series, addresses how to measure the effectiveness of internal audit and provides key questions that should be asked by the audit committee.
The NYSE Internal Audit Requirement
This section of Protiviti's "Guide to Internal Audit" addresses common questions concerning the New York Stock Exchange (NYSE) requirement that listed companies have an internal audit function. Some topics covered are: What do the NYSE rules require? Does the rule require a written internal audit charter? And, does the NYSE rule require that The IIA Standards be followed?
Sadia: Developing and maintaining a healthy internal audit function
Sadia is one of the world’s leading producers of chilled and frozen foods and Brazil’s main exporter of meat-based products. In this profile, Roberto Ciardella, Sadia’s internal audit manager, describes internal audit’s role as a major business partner. In this role, the group is responsible for overseeing the "Call Integrity" hotline – a toll-free number for Sadia’s employees to anonymously report facts to internal audit. Ciardella’s team is also tasked with introducing the concept of risk management while fostering a strong internal control infrastructure.
Setting the 2009 Audit Committee Agenda
Since we published Issue 1 of Volume III of The Bulletin, Setting the 2008 Audit Committee Agenda, a year ago, the world has changed – dramatically. This issue of The Bulletin provides observations and ideas for boards and their audit committee regarding matters they should consider to get through the trying times in the year ahead. In addition to the unfinished business, we see several additional mandates on the minds of members on audit committees. These eight items on the list are discussed further in this issue.
Should Your Board Have A Compliance Committee?
In the current regulatory environment where corporate governance is on everyone’s mind, some companies are deciding that they might benefit from more focused attention to compliance issues. These companies are forming board-level committees that are primarily and solely charged with overseeing compliance and legal matters. This column explores the relationship between compliance and corporate governance, the reasons for establishing a board-level compliance committee, the mandate and membership of such a committee, some challenges that a compliance committee may face and the potential benefit to a company of having a board-level compliance committee.
Starting an Internal Audit Function
This second section of Protiviti's "Guide to Internal Audit" addresses common questions concerning starting an internal audit function. Some of the topics covered are: How should an internal audit function be staffed? Who should the head of internal audit report to? And, what are the pros and cons of outsourcing/co-sourcing internal audit?
Veritas – Risk management and audit services at Harvard University
Founded in 1636, Harvard University is one of the most venerable institutions of higher learning in the U.S. In this profile, Gail McDermott, chief audit executive of the Risk Management and Audit Services function at Harvard, discusses three key team initiatives. These include developing an internal control structure that supports globalization efforts, application of SAS 112, and promoting ethics and accountability across the University.
AICPA Audit Committee Effectiveness Center
This website from the AICPA is designed to assist organizations and their audit committees with best practice governance aids. Individual toolkits — available to corporations, not-for profit organizations, and government entities — are designed to help audit committees, internal auditors, and management implement corporate governance processes, and can be downloaded "as is" or customized to fit an organization's needs.
CIO.COM
This site provides full text access to CIO, CIO Enterprise, and CIO Web Business magazines. It includes features not found in the print versions, including industry analysis from Giga Information Group, an interactive "ask the expert" section, and online discussion forums.
Committee of Chief Risk Officers (CCRO)
The Committee of Chief Risk Officers (CCRO) is a diverse coalition of energy companies developing tools to strengthen risk management and disclosure practices in the physical and financial trading and marketing of electricity and natural gas. Member companies represent a variety of business models, sizes, and scopes from many regions of the U.S.
Compliance Week
Compliance Week is an online resource for financial compliance and disclosure for public companies. The site features a weekly news-style layout with the latest from regulatory bodies such as the SEC, FASB, and PCAOB. Informative articles from sections include: Q&A, Rule Setters, Rules & Commentary, International Developments, and Filers Update to name a few. Although most of the site is subscription based there are white papers on various topics, compliance career opportunities and timely events listings.
Conference Board
The Conference Board is a not-for-profit business and research organization for senior executives that produces publications, statistics, and reports examining best-management practices in corporate governance and citizenship, human resources, organizational effectiveness, and other issues.
Dun & Bradstreet
Dun & Bradstreet is a publisher of business information reports and guides covering topics such as credit, collections, marketing, purchasing, and small business services. This site features selected full text guides, newsletters, industry trends, and more.
Financial Executives International (FEI)
The FEI is a professional organization representing senior level financial executives. FEI provides peer networking opportunities, emerging issues alerts, personal and professional development, and advocacy services to CFOs, VPs or Finance Controllers, Treasurers, Tax Executives, Finance and Accounting Professors in academia. This site features information about FEI events and committees as well as descriptions of publications and research.
The Institute for Business and Professional Ethics
The Institute for Business & Professional Ethics is a joint effort of the Colleges of Liberal Arts and Sciences and Commerce at DePaul University.
Institute of Internal Auditors (IIA) The IIA is a leader in certification, education, research, and technological guidance for the Internal Audit profession, and serves as the profession's watchdog and resource on significant auditing issues around the globe. The IIA also provides internal audit practitioners, executive management, boards of directors and audit committees with standards, guidance, and information on best practices in internal auditing.
International Accounting Standards Board
IASB develops practice standards and advisories for the internal audit profession that include the Code of Ethics, nature of internal audit activities, key components of a charter and an annual plan of activities, ways of conducting an engagements and communicating results, and criteria for evaluating the performance of the services.
International Risk Management Institute
International Risk Management Institute, Inc. (IRMI) is a Dallas-based research and publishing company focusing on risk management and insurance. IRMI, was founded in 1978 to research important risk and insurance issues and to provide information to business, legal, risk management, and insurance professionals.
ITAudit.org
Sponsored by the Institute of Internal Auditors, IT Audit.org is designed to enhance the auditors' knowledge of information technology (IT).
IT Governance Institute (ITGI)
To achieve success in this information economy, governance of IT is a critical facet of enterprise governance. The IT Governance Institute (ITGI) exists to assist enterprise leaders in their responsibility to ensure that IT goals align with those of the business, it delivers value, its performance is measured, its resources properly allocated and its risks mitigated. Through original research, symposia and electronic resources, the ITGI helps ensure that boards and executive management have the tools and information they need for IT to deliver against expectations.
The SEC Institute
The SEC Institute conducts workshops, seminars, and conferences covering SEC registration and reporting. This site features detailed information about course offerings including dates and locations.
U.S. Securities and Exchange Commission (SEC)
The primary mission of the SEC is to protect investors and maintain the integrity of the securities markets. The SEC requires public companies to disclose meaningful financial and other information to the public, which provides a common pool of knowledge for all investors to use to judge for themselves if a company's securities are a good investment.
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