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CS Professional · Internal and Forensic Audit · Internal Audit Engagements and Planning

Kaveri Pharma Ltd's internal audit charter has not been revisited for six years. Since then the company has acquired two subsidiaries and started a new digital sales channel. What is the most appropriate action?

The charter and audit universe should be updated for the acquisitions and new digital channel, with approval from the audit committee and board. A charter must reflect the current scope and authority of internal audit, and board-level approval preserves independence. Leaving it unchanged or amending it unilaterally would be inappropriate.

  1. ALeave the charter unchanged because charters are permanent
  2. BUpdate the charter and refresh the audit universe, with approval by the audit committee and boardCorrect
  3. CLet the head of internal audit amend the charter alone and inform management later
  4. DDelete the scope section so the charter never becomes outdated

Explanation

A charter defines purpose, authority, responsibility and scope, so it should be reviewed when the business changes materially. New subsidiaries and a digital channel expand the audit universe. Approval by the audit committee and board keeps authority and independence. Unilateral amendment weakens that, and deleting scope removes a core element.

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