3. Key Points
• Internal Audit must carry out standardized audits globally and independently.
• Organizational standards and procedures for doing so must be developed.
• Other measures are also needed to properly establish an internal audit
function that is active throughout the organization. Internal cost/benefit
analyses and the general positioning of Internal Audit within the company
should also be documented.
• Internal Audit must be able to work independently and objectively. One
prerequisite for independence is an appropriate organizational position within
the company.
4. Core Competencies Of Internal Audit
From the Board of Directors’ perspective, the following main aspects must be addressed:
• The organizational structure of Internal Audit. his may be defined by function,
region/country, line of business, etc.
• Internal Audit’s position within the organization, such that the department is able to
maintain independence and the auditors are able to carry out their responsibilities
objectively. Ideally, this includes reporting administratively to the CEO and functionally to
the Audit Committee.
• The definition of the entire audit process, including all internal standards and
quality assurance actions.
• Description of all relevant audit fields (e.g. operational audits, financial audits)
and the areas within the audit fields.
• Definition of all reporting paths and the content of audit reports.
• Scenarios for extraordinary audit requirements or activities.
• liaison with other internal and external compliance units, such as risk management
and external auditors.
5. Maintaining Independence
It is essential that Internal Audit remain independent. Internal Audit must be enabled
to work independently and free from pressure to ensure it can meet its objectives,
including assisting the work of the external auditor. IIA Standard 1100 clearly states
that the internal auditing activities of an organization must be independent.
Independence, which refers to the audit function itself, is necessary to ensure that
the internal auditors can be objective. Individual internal auditors are considered
objective when they have an “impartial, unbiased attitude and avoid conflicts of
interest” (IIA Standard 1120). To be independent, the internal audit function must be
appropriately positioned within the company.
