Communication

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

Communication of audit plans by the chief audit executive includes establishing the overall audit strategy for the engagement and developing an audit plan, which includes, in particular, planned risk assessment procedures and planned responses to the risks of material misstatement. Planning is not a discrete phase of an audit but, rather, a continual and iterative process that might begin shortly after (or in connection with) the completion of the previous audit and continues until the completion of the current audit.

Communication of audit resource requirements entails the following:

* Committee composition and dynamics: focus on committee composition, including members ‘independence and financial expertise, as well as their industry, risk management, business, and leadership experience. Limit the number of audit committee members to four or five to optimize effectiveness. Consider periodically rotating audit committee members, including the chairman.

* Risk oversight: Focus on financial risk oversight and assessment, and understand financial risk management policies and processes. „ Avoid becoming overly dependent on checklists for monitoring financial risk. Periodically reassess the list of top risks, including which member of management and which board committee is responsible for each. Evaluate information technology (IT) projects and related risks, particularly those with financial statement impact.

* Oversight of internal controls and financial reporting: Understand key controls and reporting risk areas as assessed by financial management, the internal auditors, and the independent auditor. Emphasize oversight of corporate taxes, an area where high-risk and...