Key Tools for Establishing Public Sector Audit Committees
Insight shares global experiences to ensure effectiveness
ALTAMONTE SPRINGS, Fla. July 21, 2014—The Institute of Internal Auditors (IIA) announced the release of new insight for the development of audit committees with easy-to-use tools and step-by-step instructions designed specifically for public-sector organizations.
The Global Public Sector Insight, “Independent Audit Committees in Public Sector Organizations,” makes the case for establishing public-sector audit committees. It provides how-to information on developing an audit committee charter and ensuring responsibilities are appropriate and clearly defined, and – as the process progresses – assessing audit committee performance.
Well-performing audit committees benefit their organizations in many ways, including:
- Facilitating well-informed, efficient, and effective decision-making.
- Promoting and monitoring an ethical culture.
- Ensuring compliance with a well-designed code of conduct.
- Overseeing an effective system of risk oversight and management.
- Overseeing an effective and efficient internal control system.
- Overseeing internal and external reporting of financial and nonfinancial information.
- Promoting effective communication with audit activity and external assurance providers and responding appropriately to matters they raise.
The public-sector insight describes the audit committee’s purpose and the importance of audit committee independence. It provides a model audit committee charter that can be readily used by public-sector organizations looking to create an audit committee and prescribes the appropriate knowledge and expertise for audit committee chairs and members. It indicates that audit committee members should receive training so they will understand the organization’s mission, current issues, structure, relationships, culture, and key risks. The audit committee must know about the government environment – particularly accountability structures – as well as any relevant legislation or other rules governing the organization, according to the insight.
In addition, The IIA’s new insight provides useful tools for appropriately addressing oversight of the organization’s values and ethics, governance, risk management, internal auditing, external assurance review, management action planning, financial statements, and public accountability reports. The document also includes a helpful glossary of terms.
“Because of the public sector’s mandate for accountability and transparency, it stands to reason that organizations in this sector would embrace the value an appropriately structured and resourced audit committee can bring to the table,” said IIA President and CEO Richard Chambers, CIA, QIAL, CGAP, CCSA, CRMA.
The new insight, Chambers said, will serve as an excellent resource for public-sector organizations to help build understanding. It also should ensure that the appropriate steps are taken throughout the audit committee implementation.
Download the Global Public Sector Insight here.