Which of the following functions does an internal audit charter serve?
A.
It provides a formal, written agreement with management and the board regarding the organization’s internal audit function.
B.
It provides all internal auditors with unlimited access to records, personnel, and physical property.
C.
It provides senior management with formal criteria for periodic assessments of the adequacy of the internal audit function’s purpose, authority, and responsibility.
D.
It provides the internal audit function with the authority to perform any fraud investigation engagement that can enhance or protect the value of the organization.
The internal audit charter is the formal document that establishes and communicates the internal audit function’s mandate, purpose, authority, responsibility, organizational position, and relationship with the board and senior management. It therefore represents a formal written understanding regarding how internal audit will operate within the organization. Although the charter grants access to records, personnel, systems, and property needed to perform authorized work, that access is not literally unlimited or unrelated to internal audit responsibilities, making option B overly broad. The charter does not primarily establish criteria for periodic assessment of itself, nor does it automatically authorize every possible fraud investigation. Specific authority and responsibilities must be defined appropriately. The Internal Audit Fundamentals material similarly describes the charter as a foundational agreement approved by the governing body and agreed to by management.
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