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Establish Objectives with an Internal Audit Charter
The presence of an internal audit charter is vital to an institution ’ s success . Formally approved by the Board or Supervisory Committee , an internal audit charter defines the purpose , authority , responsibility and position of the internal audit function within the organization . The Institute of Internal Auditing ( IIA ) has identified seven key areas that strengthen the charter and , consequently , the effectiveness of internal audit . These should each be established when creating a charter , and include :
• Mission and purpose
• International standards for the professional practice of internal auditing
• Authority
• Independence and objectivity
• Scope of internal audit activities
• Responsibilities of internal audit
• Quality assurance and improvement program
Ensure Adequate Resources
Sufficient resources are essential for managing an institution ’ s internal audit plan . This includes having a well-qualified team on your side with the necessary skills and experience . Financial institutions should also invest in training and development for its staff to keep them up-to-date with the latest regulations and auditing techniques . Additionally , access to evolving technology and data analytics tools is crucial for a comprehensive internal audit function . Leveraging innovative methodologies , such as artificial intelligence , can empower internal auditors to adapt to evolving risks and opportunities .
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Encourage Communication and Transparency
Clear and open communication between internal auditors , management and the Supervisory Committee helps identify issues , clarify findings or other observations and facilitate the resolution of recommendations . It is important that findings or other observations are factual and timely , and reports are clear , concise and easily understandable . An executive session should be held with internal auditors after each Supervisory Committee meeting to discuss findings , risks and resolutions .
Continuously Monitor and Improve
Financial institutions should implement a system of continuous monitoring to observe and evaluate identified risks on a regular basis . Additionally , a system of monitoring should also track the progress of implementation of internal audit ’ s suggested recommendations and improvements . Regularly reviewing and updating internal audit processes and procedures is vital to adapt to changing risks and regulatory requirements .
Your Dedicated Internal Audit Resource
Risk-based internal audit enhances its overall operations and risk management practices , ultimately contributing to long-term success and sustainability in a dynamic financial landscape .
Doeren Mayhew ’ s Financial Institutions Group stands ready to help you navigate the complexities that internal audits present to your institution . Our team takes the internal auditing role beyond traditional risk detection to deliver strategic , actionable insight . Contact us today to learn more . ■
Issue 2 | 2023 VIEWpoint 9