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HomeMy WebLinkAboutCS 55-06 012 CiUI 0# REPORT TO AUDIT COMMITTEE Report Number: CS 55-06 Date: October 3, 2006 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Internal Audit Charter Recommendation: That Report CS 55-06 of the Director, Corporate Services & Treasurer be approved. Executive Summary: The Institute of Internal Auditors' professional standards require that a charter be established for the internal audit activity and be approved by the Audit Committee. Financial Implications: None Background: A charter is an important document in the foundation of an internal audit function. It outlines the purpose, authority, and responsibility of the internal audit activity and establishes what senior management and the Audit Committee expect from the internal audit staff. The professional standards promoted by the Institute of Internal Auditors require the charter be approved by the Audit Committee. Attached is the City of Pickering's Internal Audit Charter that was designed based on the Institute of Internal Auditors' sample charter, as well as examples from other organizations. The charter sets out the mission, objective and scope, accountability, authority, responsibilities and standards of practice of the internal audit activity. Attachments: 1. City of Pickering Internal Audit Charter Report CS 55-06 Date: October 3, 2006 0'1 ':' ,) Subject: Internal Audit Charter Page 2 Prepared By: Approved I Endorsed By: ~7JJ'~ ~mes Halsall Manager, Internal Audit & Control ~ .".....' .... . ",::;,;..c..,- ~..,;,.;,:~ Gillis A. Paterson Director, Corporate Services & Treasurer GAP:jh Attachment Copy: Chief Administrative Officer Recommended for the consideration of Pickering City Council ,,; 6 01.:i ATTACHf"iEi': ,.,-' . ..;.iJORT#.tS- 554 D.6 City of Pickering Internal Audit Charter Mission The mission of the internal audit function is to provide independent, objective assurance and consulting services designed to add value and improve the City of Pickering's operations. It helps the City accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Objective and Scope The objective of the internal audit function is to work co-operatively with management and staff to improve the economy, efficiency, effectiveness, and accountability of City programs and operations. The scope of internal audit's activities shall encompass all systems, functions, activities and operations of the City. Specifically, the internal audit function is to determine whether the risk management systems, control environment and governance processes, as designed and represented by management, are adequate and functioning in the following manner: . risks are appropriately identified and managed; . programs are delivered in an efficient and effective manner, and objectives are achieved; . adequate financial and operating information is provided to Council and City management and staff for decision making and accountability; . regulatory or contractual requirements are recognized and met; and . resources are adequately protected, used economically and effectively applied against stated priorities. The internal audit function contributes to an effective control environment. However, it does not relieve management of its primary responsibility for establishing and maintaining adequate internal controls to provide reasonable assurance that organizational goals and objectives will be accomplished in the most effective, efficient and economical manner. Accountability The Director, Corporate Services & Treasurer, with the assistance of the Manager, Internal Audit & Control will be accountable to the Audit Committee and Chief Administrative Officer for the management and delivery of the internal audit program. 01~) Authority The Manager, Internal Audit & Control, reports directly to the Director, Corporate Services & Treasurer. Where necessary, the Manager, Internal Audit & Control shall have direct communication with the Audit Committee and/or Chief Administrative Officer. The Manager, Internal Audit & Control and the Audit Analyst shall have: . unrestricted access to all activities, records, properties and personnel necessary to carry out their responsibilities; . authority to allocate resources, set frequencies, select subjects, determine scopes of work and apply techniques required to accomplish audit objectives; and . full support and cooperation of City management and staff. Responsibilities The Manager, Internal Audit & Control, shall have a responsibility to: . develop a three year audit plan using an appropriate risk-based methodology in consultation with senior management, and submit the plan to the Audit Committee for its review; . implement the audit plan and provide periodic updates to senior management and the Audit Committee; . maintain a professional audit staff with sufficient knowledge, skills and experience to meet the requirements of this Charter; . report audit results to the Audit Committee and senior management; . follow-up on previous issued audit report recommendations every six months; and . assist in the investigation of significant suspected fraudulent activities within the City and notify the Audit Committee and senor management of the results. The Manager, Internal Audit & Control and the Audit Analyst has no authority over, and are not directly responsible for, any activities reviewed. Standards To the extent possible, the Internal Audit function will follow the Standards for the Professional Practice of Internal Audit and the Code of Ethics adopted by the Institute of Internal Auditors. Approval Approved by the Audit Committee on October 3,2006.