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Understanding the corporate culture is fundamental for an internal auditor assessing the opportunity for fraud within an organization. Corporate culture influences how rules, norms, and behaviors are developed and enforced. It provides context to the risk environment and the potential for fraud to occur, facilitating more targeted and effective audit strategies focused on fraud risks.

Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)

According to IIA guidance, the internal audit charter is a formal document that defines the internal audit activity's purpose, authority, and responsibility. It establishes the internal audit activity's position within the organization, including the nature of the chief audit executive’s functional reporting relationship with the board; authorizes access to records, personnel, and physical properties relevant to the performance of engagements; and defines the scope of internal audit activities. Final approval of the internal audit charter is done by the board, not just senior management. Furthermore, the charter might describe the expectations for communicating the results of the quality assurance and improvement program, which ensures that the internal audit activity continues to operate effectively and efficiently.

IIA Standard 1000: Purpose, Authority, and Responsibility; and Standard 1300: Quality Assurance and Improvement Program.

The CAE acted appropriately, and the independence of the internal audit activity was not impaired by seeking input from senior management and the external auditor prior to submitting the annual audit plan for board approval. This practice aligns with the IIA's guidance, which encourages collaboration and communication to ensure that the audit plan addresses relevant risks and aligns with organizational goals.

The IIA’s International Standards for the Professional Practice of Internal Auditing regarding the development of the internal audit plan.

According to the IIA guidance, the frequency of external assessments can exceed the five-year guideline at the board's discretion. This flexibility allows organizations to conduct external quality assessments more frequently than the minimum standard based on their specific needs, risk exposure, or changes in the operating environment, ensuring continuous improvement and adherence to best practices in internal auditing.

Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)