The Internal Audit Charter is a formal, written document that defines the internal audit function’s purpose, authority, and responsibility. The charter establishes the internal audit activity’s position within the organization, including the nature of the Chief Audit Executive’s functional reporting relationship with the Board.
[Draft Proposed Charter Document] ---> [Joint Executive Review] ---> [Audit Committee Signed Approval]

A comprehensive Internal Audit Charter must include the following core sections:
  1. Introduction and Framework Alignment: Formally establishes that the audit function’s activities are guided by the mandatory elements of the IIA’s Global Internal Audit Standards and Code of Ethics.
  2. Position and Reporting Lines: Explicitly details the dual-reporting framework of the CAE, granting the audit function unhindered access to the independent Audit Committee.
  3. Scope of Authority: Grants the internal audit team complete, unrestricted access to all corporate records, physical properties, information databases, technology environments, and personnel assets required to execute approved engagements.
  4. Accountability Metrics: Outlines the CAE’s duty to report on the status of the audit plan, resource constraints, and control tracking indicators to the Audit Committee at least quarterly.
  5. Operational Boundaries: Expressly states that internal auditors hold zero direct operational authority over the functions they audit. This means auditors cannot design or execute internal controls, manage staff outside the audit department, or develop corporate processes, preserving their objective status.

 
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