26 July 2017

Performance standards
Chartered Institute of Internal Auditors

2000 Managing the Internal Audit Activity

The chief audit executive must effectively manage the internal audit activity to ensure it adds value
to the organisation.

Interpretation:
The internal audit activity is effectively managed when:

• It achieves the purpose and responsibility included in the internal audit charter.
• It conforms with the Standards.
• Its individual members conform with the Code of Ethics and the Standards.
• It considers trends and emerging issues that could impact the organisation.

The internal audit activity adds value to the organisation and its stakeholders when it considers
strategies, objectives and risks; strives to offer ways to enhance governance, risk management and
control processes; and objectively provides relevant assurance.

2010 Planning
The chief audit executive must establish a risk-based plan to determine the priorities of the internal
audit activity, consistent with the organisation's goals.

Interpretation:
To develop the risk-based plan, the chief audit executive consults with senior management and the
board and obtains an understanding of the organisation’s strategies, key business objectives,
associated risks, and risk management processes.

The chief audit executive must review and adjust the plan, as necessary, in response to changes in
the organisation's business, risks, operations, programmes, systems, and controls.

2010.A1
The internal audit activity's plan of engagements must be based on a documented risk assessment,
undertaken at least annually. The input of senior management and the board must be considered in
this process.

2010.A2
The chief audit executive must identify and consider the expectations of senior management, the
board and other stakeholders for internal audit opinions and other conclusions.

2010.C1
The chief audit executive should consider accepting proposed consulting engagements based on

1
© Chartered Institute of Internal Auditors
 the engagement's potential to improve management of risks, add value and improve the
organisation's operations. Accepted engagements must be included in the plan.

2020 Communication and Approval

The chief audit executive must communicate the internal audit activity's plans and resource
requirements, including significant interim changes, to senior management and the board for review
and approval. The chief audit executive must also communicate the impact of resource limitations.

2030 Resource Management

The chief audit executive must ensure that internal audit resources are appropriate, sufficient and
effectively deployed to achieve the approved plan.

Interpretation:
Appropriate refers to the mix of knowledge, skills and other competencies needed to perform the
plan. Sufficient refers to the quantity of resources needed to accomplish the plan. Resources are
effectively deployed when they are used in a way that optimises the achievement of the approved
plan.

2040 Policies and Procedures

The chief audit executive must establish policies and procedures to guide the internal audit activity.

Interpretation:
The form and content of policies and procedures are dependent upon the size and structure of the
internal audit activity and the complexity of its work.

2050 Coordination and Reliance

The chief audit executive should share information, coordinate activities and consider relying upon
the work of other internal and external assurance and consulting service providers to ensure proper
coverage and minimise duplication of efforts.

Interpretation:
In coordinating activities, the chief audit executive may rely on the work of other assurance and
consulting service providers. A consistent process for the basis of reliance should be established,
and the chief audit executive should consider the competency, objectivity, and due professional
care of the assurance and consulting service providers.

The chief audit executive should also have a clear understanding of the scope, objectives, and
results of the work performed by other providers of assurance and consulting services. Where
reliance is placed on the work of others, the chief audit executive is still accountable and
responsible for ensuring adequate support for conclusions and opinions reached by the internal
audit activity.

2
© Chartered Institute of Internal Auditors
 2060 Reporting to Senior Management and the Board

The chief audit executive must report periodically to senior management and the board on the
internal audit activity's purpose, authority, responsibility and performance relative to its plan and on
its conformance with the Code of Ethics and the Standards.

Reporting must also include significant risk and control issues, including fraud risks, governance
issues and other matters that require the attention of senior management and/or the board.

Interpretation:
The frequency and content of reporting are determined collaboratively by the chief audit executive,
senior management, and the board. The frequency and content of reporting depends on the
importance of the information to be communicated and the urgency of the related actions to be
taken by senior management and/or the board.

The chief audit executive’s reporting and communication to senior management and the board must
include information about:

• The audit charter.

• Independence of the internal audit activity.
• The audit plan and progress against the plan.
• Resource requirements.
• Results of audit activities.
• Conformance with the Code of Ethics and the Standards, and action plans to address any
significant conformance issues.
• Management’s response to risk that, in the chief audit executive’s judgment, may be
unacceptable to the organisation.

These and other chief audit executive communication requirements are referenced throughout the
Standards.

2070 External Service Provider and Organisational Responsibility for

Internal Audit
When an external service provider serves as the internal audit activity, the provider must make the
organisation aware that the organisation has the responsibility for maintaining an effective internal
audit activity.

Interpretation:
This responsibility is demonstrated through the quality assurance and improvement programme
which assesses conformance with the the Code of Ethics and the Standards.

2100 Nature of Work

The internal audit activity must evaluate and contribute to the improvement of the organisations
governance, risk management and control processes using a systematic, disciplined and risk
based approach. Internal audit credibility and value are enhanced when auditors are proactive and

3
© Chartered Institute of Internal Auditors
 their evaluations offer new insights and consider future impact.

2110 Governance

The internal audit activity must assess and make appropriate recommendations to improve the
organisation’s governance processes for:

• Making strategic and operational decisions.

• Overseeing risk management and control.
Promoting appropriate ethics and values within the organisation.

• Ensuring effective organisational performance management and accountability.

• Communicating risk and control information to appropriate areas of the organisation.
• Coordinating the activities of, and communicating information among, the board, external and
internal auditors, other assurance providers and management.

2110.A1
The internal audit activity must evaluate the design, implementation and effectiveness of the
organisation's ethics-related objectives, programmes and activities.

2110.A2
The internal audit activity must assess whether the information technology governance of the
organisation supports the organisation's strategies and objectives.

2120 Risk Management

The internal audit activity must evaluate the effectiveness and contribute to the improvement of risk
management processes.

Interpretation:
Determining whether risk management processes are effective is a judgment resulting from the
internal auditor's assessment that:

• Organisational objectives support and align with the organisation's mission.

• Significant risks are identified and assessed.
• Appropriate risk responses are selected that align risks with the organisation's risk appetite.
• Relevant risk information is captured and communicated in a timely manner across the
organisation, enabling staff, management and the board to carry out their responsibilities.

The internal audit activity may gather the information to support this assessment during multiple
engagements. The results of these engagements, when viewed together, provide an understanding
of the organisation's risk management processes and their effectiveness.

Risk management processes are monitored through ongoing management activities, separate
evaluations, or both.

2120.A1
The internal audit activity must evaluate risk exposures relating to the organisation's governance,
operations and information systems regarding the:

4
© Chartered Institute of Internal Auditors
 • Achievement of the organisation's strategic objectives.
• Reliability and integrity of financial and operational information.
• Effectiveness and efficiency of operations and programmes.
• Safeguarding of assets.
• Compliance with laws, regulations, policies, procedures and contracts.

2120.A2
The internal audit activity must evaluate the potential for the occurrence of fraud and how the
organisation manages fraud risk.

2120.C1
During consulting engagements, internal auditors must address risk consistent with the
engagement's objectives and be alert to the existence of other significant risks.

2120.C2
Internal auditors must incorporate knowledge of risks gained from consulting engagements into their
evaluation of the organisation's risk management processes.

2120.C3
When assisting management in establishing or improving risk management processes, internal
auditors must refrain from assuming any management responsibility by actually managing risks.

2130 Control

The internal audit activity must assist the organisation in maintaining effective controls by evaluating
their effectiveness and efficiency and by promoting continuous improvement.

2130.A1
The internal audit activity must evaluate the adequacy and effectiveness of controls in responding to
risks within the organisation's governance, operations and information systems regarding the:

• Achievement of the organisation's strategic objectives.

• Reliability and integrity of financial and operational information.
• Effectiveness and efficiency of operations and programmes.
• Safeguarding of assets.
• Compliance with laws, regulations, policies, procedures and contracts.

2130.C1
Internal auditors must incorporate knowledge of controls gained from consulting engagements into
the evaluation of the organisation's control processes.

2200 Engagement Planning

Internal auditors must develop and document a plan for each engagement, including the
engagement's objectives, scope, timing and resource allocations. The plan must consider the
organisation’s strategies, objectives, and risks relevant to the engagement.

5
© Chartered Institute of Internal Auditors
 2201 Planning Considerations

In planning the engagement, internal auditors must consider:

• The strategies and objectives of the activity being reviewed and the means by which the activity
controls its performance.
• The significant risks to the activity's objectives, resources and operations and the means by
which the potential impact of risk is kept to an acceptable level.
• The adequacy and effectiveness of the activity's governance, risk management and control
processes compared to a relevant framework or model.
• The opportunities for making significant improvements to the activity's governance, risk
management and control processes.

2201.A1
When planning an engagement for parties outside the organisation, internal auditors must establish
a written understanding with them about objectives, scope, respective responsibilities and other
expectations, including restrictions on distribution of the results of the engagement and access to
engagement records.

2201.C1
Internal auditors must establish an understanding with consulting engagement clients about
objectives, scope, respective responsibilities and other client expectations. For significant
engagements, this understanding must be documented.

2210 Engagement Objectives

Objectives must be established for each engagement.

2210.A1
Internal auditors must conduct a preliminary assessment of the risks relevant to the activity under
review. Engagement objectives must reflect the results of this assessment.

2210.A2
Internal auditors must consider the probability of significant errors, fraud, non-compliance and other
exposures when developing the engagement objectives.

2210.A3
Adequate criteria are needed to evaluate governance, risk management and controls. Internal
auditors must ascertain the extent to which management and/or the board has established
adequate criteria to determine whether objectives and goals have been accomplished.

If adequate, internal auditors must use such criteria in their evaluation. If inadequate, internal
auditors must identify appropriate evaluation criteria through discussion with management and/or
the board.

Interpretation:
Types of criteria may include:

• Internal (e.g., policies and procedures of the organisation).

6
© Chartered Institute of Internal Auditors
 • External (e.g., laws and regulations imposed by statutory bodies).
• Leading practices (e.g., industry and professional guidance).

2210.C1
Consulting engagement objectives must address governance, risk management and control
processes to the extent agreed upon with the client.

2210.C2
Consulting engagement objectives must be consistent with the organisation's values, strategies,
and objectives.

2220 Engagement Scope

The established scope must be sufficient to achieve the objectives of the engagement.

2220.A1
The scope of the engagement must include consideration of relevant systems, records, personnel
and physical properties, including those under the control of third parties.

2220.A2
If significant consulting opportunities arise during an assurance engagement, a specific written
understanding as to the objectives, scope, respective responsibilities and other expectations should
be reached and the results of the consulting engagement communicated in accordance with
consulting standards.

2220.C1
In performing consulting engagements, internal auditors must ensure that the scope of the
engagement is sufficient to address the agreed-upon objectives. If internal auditors develop
reservations about the scope during the engagement, these reservations must be discussed with
the client to determine whether to continue with the engagement.

2220.C2
During consulting engagements, internal auditors must address controls consistent with the
engagement's objectives and be alert to significant control issues.

2230 Engagement Resource Allocation

Internal auditors must determine appropriate and sufficient resources to achieve engagement
objectives based on an evaluation of the nature and complexity of each engagement, time
constraints and available resources.

Interpretation:
Appropriate refers to the mix of knowledge, skills, and other competencies needed to perform the
engagement.

Sufficient refers to the quantity of resources needed to accomplish the engagement with due
professional care.

7
© Chartered Institute of Internal Auditors
 2240 Engagement Work Programme

Internal auditors must develop and document work programmes that achieve the engagement
objectives.

2240.A1
Work programmes must include the procedures for identifying, analysing, evaluating and
documenting information during the engagement. The work programme must be approved prior to its
implementation and any adjustments approved promptly.

2240.C1
Work programmes for consulting engagements may vary in form and content depending upon the
nature of the engagement.

2300 Performing the Engagement

Internal auditors must identify, analyse, evaluate and document sufficient information to achieve the
engagement's objectives.

2310 Identifying Information

Internal auditors must identify sufficient, reliable, relevant and useful information to achieve the
engagement's objectives.

Interpretation:
Sufficient information is factual, adequate and convincing so that a prudent, informed person would
reach the same conclusions as the auditor. Reliable information is the best attainable information
through the use of appropriate engagement techniques.

Relevant information supports engagement observations and recommendations and is consistent

with the objectives for the engagement. Useful information helps the organisation meet its goals.

2320 Analysis and Evaluation

Internal auditors must base conclusions and engagement results on appropriate analyses and
evaluations.

2330 Documenting Information

Internal auditors must document sufficient, reliable, relevant, and useful information to support the
engagement results and conclusions.

8
© Chartered Institute of Internal Auditors
 2330.A1
The chief audit executive must control access to engagement records. The chief audit executive
must obtain the approval of senior management and/or legal counsel prior to releasing such records
to external parties, as appropriate.

2330.A2
The chief audit executive must develop retention requirements for engagement records, regardless
of the medium in which each record is stored. These retention requirements must be consistent
with the organisation's guidelines and any pertinent regulatory or other requirements.

2330.C1
The chief audit executive must develop policies governing the custody and retention of consulting
engagement records, as well as their release to internal and external parties. These policies must
be consistent with the organisation's guidelines and any pertinent regulatory or other requirements.

2340 Engagement Supervision

Engagements must be properly supervised to ensure objectives are achieved, quality is assured
and staff is developed.

Interpretation:
The extent of supervision required will depend on the proficiency and experience of internal auditors
and the complexity of the engagement. The chief audit executive has overall responsibility for
supervising the engagement, whether performed by or for the internal audit activity, but may
designate appropriately experienced members of the internal audit activity to perform the review.
Appropriate evidence of supervision is documented and retained.

2400 Communicating Results

Internal auditors must communicate the results of engagements.

2410 Criteria for Communicating

Communications must include the engagement’s objectives, scope, and results.

2410.A1
Final communication of engagement results must include applicable conclusions, as well as
applicable recommendations and/or action plans. Where appropriate, the internal auditors’ opinion
should be provided. An opinion must take into account the expectations of senior management, the
board and other stakeholders and must be supported by sufficient, reliable, relevant and useful
information.

Interpretation:
Opinions at the engagement level may be ratings, conclusions or other descriptions of the results.
Such an engagement may be in relation to controls around a specific process, risk or business
unit. The formulation of such opinions requires consideration of the engagement results and their
significance.

9
© Chartered Institute of Internal Auditors
 2410.A2
Internal auditors are encouraged to acknowledge satisfactory performance in engagement
communications.

2410.A3
When releasing engagement results to parties outside the organisation, the communication must
include limitations on distribution and use of the results.

2410.C1
Communication of the progress and results of consulting engagements will vary in form and content
depending upon the nature of the engagement and the needs of the client.

2420 Quality of Communications

Communications must be accurate, objective, clear, concise, constructive, complete and timely.

Interpretation:
Accurate communications are free from errors and distortions and are faithful to the underlying
facts.

Objective communications are fair, impartial and unbiased and are the result of a fair-minded and
balanced assessment of all relevant facts and circumstances.

Clear communications are easily understood and logical, avoiding unnecessary technical language
and providing all significant and relevant information.

Concise communications are to the point and avoid unnecessary elaboration, superfluous detail,
redundancy and wordiness.

Constructive communications are helpful to the engagement client and the organisation and lead to
improvements where needed.

Complete communications lack nothing that is essential to the target audience and include all
significant and relevant information and observations to support recommendations and conclusions.

Timely communications are opportune and expedient, depending on the significance of the issue,
allowing management to take appropriate corrective action.

2421 Errors and Omissions

If a final communication contains a significant error or omission, the chief audit executive must
communicate corrected information to all parties who received the original communication.

2430 Use of Conducted in Conformance with the International Standards

for the Professional Practice of Internal Auditing

Indicating that engagements are “conducted in conformance with the International Standards for the

10
© Chartered Institute of Internal Auditors
 Professional Practice of Internal Auditing” is appropriate only if supported by the results of the
quality assurance and improvement programme.

2431 Engagement Disclosure of Non-conformance

When non-conformance with the the Code of Ethics or the Standards impacts a specific
engagement, communication of the engagement results must disclose the:

• Principle(s) or rule(s) of conduct of the Code of Ethics or Standard(s) with which full conformance
was not achieved.
• Reason(s) for non-conformance.
• Impact of non-conformance on the engagement and the communicated engagement results.

2440 Disseminating Results

The chief audit executive must communicate results to the appropriate parties.

Interpretation:
The chief audit executive is responsible for reviewing and approving the final engagement
communication before issuance and for deciding to whom and how it will be disseminated. When
the chief audit executive delegates these duties, he or she retains overall responsibility.

2440.A1
The chief audit executive is responsible for communicating the final results to parties who can
ensure that the results are given due consideration.

2440.A2
If not otherwise mandated by legal, statutory, or regulatory requirements, prior to releasing results
to parties outside the organisation the chief audit executive must:

• Assess the potential risk to the organisation.

• Consult with senior management and/or legal counsel as appropriate.
• Control dissemination by restricting the use of the results.

2440.C1
The chief audit executive is responsible for communicating the final results of consulting
engagements to clients.

2440.C2
During consulting engagements, governance, risk management and control issues may be
identified. Whenever these issues are significant to the organisation, they must be communicated
to senior management and the board.

2450 Overall Opinions

When an overall opinion is issued, it must take into account the strategies, objectives and risks of
the organisation; and the expectations of senior management, the board and other stakeholders.

11
© Chartered Institute of Internal Auditors
 The overall opinion must be supported by sufficient, reliable, relevant and useful information.

Interpretation:
The communication will include:

• The scope including the time period to which the opinion pertains.
• Scope limitations.
• Consideration of all related projects, including the reliance on other assurance providers.
• A summary of the information that supports the opinion.
• The risk or control framework or other criteria used as a basis for the overall opinion.
• The overall opinion, judgment or conclusion reached.

The reasons for an unfavourable overall opinion must be stated.

2500 Monitoring Progress

The chief audit executive must establish and maintain a system to monitor the disposition of results
communicated to management.

2500.A1
The chief audit executive must establish a follow-up process to monitor and ensure that
management actions have been effectively implemented or that senior management has accepted
the risk of not taking action.

2500.C1
The internal audit activity must monitor the disposition of results of consulting engagements to the
extent agreed upon with the client.

2600 Communicating the Acceptance of Risks

When the chief audit executive concludes that management has accepted a level of risk that may
be unacceptable to the organisation, the chief audit executive must discuss the matter with senior
management.

If the chief audit executives determines that the matter has not been resolved, the chief audit
executive must communicate the matter to the board.

Interpretation:

The identification of risk accepted by management may be observed through an assurance or

consulting engagement, monitoring progress on actions taken by management as a result of prior
engagements, or other means. It is not the responsibility of the chief audit executive to resolve the
risk.

12
© Chartered Institute of Internal Auditors