Other chapters have talked about how to manage many internal audit processes
or how to enhance internal audit procedures. Internal audit’s relationship
with the board of director’s audit committee presents a different challenge to
all members of the internal audit team. Internal audit reports to the audit committee,
which approves its overall planning activities and reviews the results of
internal audits. However, the relationship here is often a bit different from a classic
supervisor–subordinate relationship. Audit committees have become much more active
in their oversight of internal audit activities since the launch of Sarbanes-Oxley
(SOx), but usually the committees are not physically present on a day-to-day basis.
Internal audit’s chief audit executive (CAE) is often the main contact with the
audit committee and frequently must educate and advise the committee on internal
auditing issues. For many corporations today, the audit committee’s relationship
with internal auditors is an evolving issue. Many audit committees understand the
financial reporting issues associated with their external auditors but sometimes view
internal audit as an almost unfamiliar resource.