Certified Internal Auditor (CIA) Practice Test

What specific item should be included in the objectives statement of an internal audit charter?

1. Report all engagement results to the board every quarter

2. Notify governmental regulatory agencies of unethical practices

3. Evaluate the adequacy and effectiveness of controls

4. Submit budget variance reports to management every month

The correct answer is: Evaluate the adequacy and effectiveness of controls

Including the evaluation of the adequacy and effectiveness of controls in the objectives statement of an internal audit charter is essential because it highlights the primary purpose of internal auditing. The internal audit function involves assessing whether an organization’s internal controls are sufficient to manage risks and ensure compliance with policies, laws, and regulations. This evaluation also supports the organization’s objectives and helps improve operational efficiency. The objectives statement sets the tone for the internal audit function, articulating the crucial role that auditors play in providing assurance and insight into risk management processes. By focusing on the evaluation of controls, the internal audit charter aligns with international internal auditing standards, which emphasize the need for auditors to provide credible assessments of governance, risk management, and control processes. This focus ultimately leads to enhanced accountability and better strategic decision-making within the organization.