STANDARD ON INTERNAL AUDIT (SIA) 210
MANAGING THE INTERNAL AUDIT
FUNCTION
Contents
Paragraph(s)
Introduction ...................................................................................... 1
Objectives ......................... ............................................................... 2
Requirements ..................................................................................... 3
Explanatory Comments ....................................................................... 4
Effective Date .................................................................................... 5
This Standard on Internal Audit (SIA) 210, "Managing the Internal Audit
Function", issued by the Council of the Institute of Chartered
Accountants of India (ICAI) should be read in conjunction with the
"Preface to the Standards on Internal Audit", "Framewo rk Governing
Internal Audits" and "Basic Principles of Internal Audit" issued by the
Institute.
1. Introduction
1.1 The Internal Audit Function, generally, comprises of the Chief Internal
Auditor and a team of individuals performing internal audits in an
organisation.
1.2 The Internal Audit Function performs a number of activities to achieve
its objectives as outlined in its Charter (or Terms of Engagement). A
few of the critical activities are as follows:
(a) Define the overall plan, scope and methodology of the Internal
Audit Function on a periodic basis.
(b) Oversee and monitor various audit assignments, their proper
planning, execution, reporting of findings and subsequent
closure of reported observations.
(c) Plan, acquire, engage and review the performance, training and
development of professional staff, talent and other resources to
achieve its objectives.
(d) Identify, source, engage and manage external experts and
technical solutions, if required.
(e) Communicate and engage with all key stakeholders regarding
progress and achievement of objectives.
(f) Develop and maintain a quality evaluation and improvement
program.
1.3 Completion of the above activities are part of the responsibility of the
Chief Internal Auditor or the person who has been designated to
coordinate and manage the overall performance of above-mentioned
activities.
1.4 Scope: For companies subject to internal audit under Companies Act,
2013, the individual (or firm) notified by the Company to the
Government as the officially appointed internal auditor as per Section
138 of the Companies Act, 2013, is expected to act as the Chief
Internal Auditor. In other cases, it is the person appointed by the
Company to perform a similar role. Where the internal audit activity is
partly outsourced, the external engagement partner may not be able to
assume the overall responsibility of managing the internal audit
activity for the whole Company. This limitation, if applicable, shall be
Managing the Internal Audit Function
documented in the terms of engagement with the Company. In such
situations, this SIA will apply to members only to the extent of the
outsourced part of the internal audit activity.
2. Objectives
2.1 The objectives of this Standard on Managing the Internal Audit
Function are to ensure the following:
(a) The achievement of overall objectives of internal audit (as
outlined in the Internal Audit Charter or Engagement Letter).
(b) Adequate skilled resources and expertise are in place and
deployed well, to provide the required level of assurance.
(c) Internal audit assignments are undertaken in a systematic,
disciplined and professional manner.
(d) Quality of the work performed forms a sound basis for reporting
and is supported by evidence and documentation.
(e) Work is conducted in conformance with the Standards on
Internal Audit and other related pronouncements issued by the
ICAI.
3. Requirements
3.1 The Chief Internal Auditor has the overall responsibility to ensure the
achievement of the objectives of the internal audit function through a
well documented internal audit process (refer Para. 4.1).
3.2 A resourcing plan shall be prepared to ensure that the internal audit
function has the required professional skills either internally, or
acquired externally and assigned to conduct all internal audit
assignments effectively (refer Para. 4.2).
3.3 Internal audit assignments shall be executed as per the documented
internal audit process. The internal audit process shall be adequately
reviewed, monitored and supervised to achieve the planned objectives
(refer Para. 4.3).
3.4 The internal audit function shall have in place a formal quality
evaluation and improvement program designed to ensure that all the
internal audit activities undertaken by the function are conducted in
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Standard on Internal Audit (SIA) 210
conformance with the pronouncements and Standards on Internal
Audit (refer Para. 4.4).
4. Explanatory Comments
4.1 Internal Audit Process (refer Para. 3.1): An internal audit process
helps to execute internal audit activities and assignments in an
effective and efficient manner. It documents the policies and
procedures for conducting internal audit in a disciplined, time-bound
and professional manner. It provides guidance on how each audit
assignment is to be undertaken: the key inputs required, significant
steps to be completed, milestones to be achieved, and essential
output to be generated for desired quality of outcome. Various
elements of an internal audit process shall be collated in a
comprehensive internal audit manual used as reference material by
the internal audit staff performing the assignments.
4.2 Resourcing Plan (refer Para. 3.2): The resourcing plan shall map the
skill requirements of the planned internal audits with the capabilities of
the available resources of the internal audit function. These resources
shall be organised and structured into audit teams such that they have
the necessary knowledge, experience, expertise and skills required to
conduct the planned audit assignments. If such expertise or skills are
not available in-house, it shall be outsourced.
The resourcing plan shall ensure proper deployment of the talent as
well as the manner in which they are periodically evaluated for
performance and skill development through education and training
programs.
4.3 Monitoring Progress and Achievement of Objectives (refer Para.
3.3): The Internal Auditor shall deploy a set process for monitoring
and reviewing the progress by continuously tracking the assignments
underway. Using time budgets and deadlines, and monitoring them
constantly, helps to ensure that the progress is on track. A continuous
review of the nature of findings and emerging issues helps to ensure
that the audit work remains focused on the objectives.
Monitoring includes conducting periodic meetings for sharing of
progress dash-boards. The Chief Internal Auditor shall engage in
periodic meetings with the staff, the outsourced internal audit firm,
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executive management and key stakeholders to ensure progress is on
track and concerns, if any, in this regard, are addressed immediately.
4.4 Quality Evaluation and Improvement Program (refer Para. 3.4): A
documented quality evaluation and improvement program shall be
designed and implemented to confirm the reliability of the audit work
performed by internal audit staff. This program shall be drafted in line
with the pronouncements and Standards on Internal Audit issued by
the ICAI.
The quality evaluation and improvement program shall be
implemented and monitored by a person having the requisite
knowledge and skills as well as the authority to intervene in areas of
non-compliance. It shall be supported with a system of identifying and
reporting key quality parameters periodically, and corrective actions
taken in case of deviations from Standards.
4.5 Documentation: To confirm compliance with the Standard, all key
activities which form part of the internal audit process shall be
documented to confirm their timely completion.
Key elements of documentation are as follows:
(a) The Internal Audit Process, in the form of an Internal Audit
Manual.
(b) Resourcing Plan, showing staff competencies, assignments
conducted, performance evaluation and skill development.
(c) Progress Monitoring Reports showing the various assignments
underway, their progress against budgets and anticipated time
for completion.
(d) Quality Evaluation and Improvement Program appropriately
cross referenced to the SIAs, where applicable.
5. Effective Date
5.1 This Standard is applicable for internal audits beginning on or after a
date to be notified by the Council of the Institute.
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