Northgate Bank's audit committee is reviewing who is accountable for the internal audit function's authority and standing. The chief audit executive drafts and maintains the mandate, and senior management provides day-to-day support and resources. Where does ultimate accountability for the internal audit mandate rest?
- AWith the board, which approves the mandate and holds ultimate accountability for the internal audit function's authority, role, and responsibilities. Correct
- BWith the chief audit executive, because the person who drafts and maintains the mandate necessarily bears final accountability for how adequate its terms are.
- CWith senior management, because the function reports to management administratively and depends on management for its people, its systems, and its budget.
- DWith the external auditor, whose annual opinion on the financial statements confirms that the internal audit mandate has remained appropriate throughout the year.
Why A is correct: The board approves the mandate and provides oversight, so it holds ultimate accountability for internal audit's authority, role, and responsibilities, making this the correct statement of where accountability rests.
Why B is wrong: Drafting and maintaining the mandate is genuinely the chief audit executive's task, which makes this tempting, but proposing a mandate is not the same as holding ultimate accountability for it, so this is wrong.
Why C is wrong: Administrative reporting and resourcing do sit with management, which makes this plausible, but administrative support is not ultimate accountability for the mandate, so attributing it to management is incorrect.
Why D is wrong: The external auditor is independent of the organisation and opines on the financial statements, not the internal audit mandate, so assigning accountability for the mandate to the external auditor is wrong.