DEPARTMENT OF PRIMARY INDUSTRIES,
WATER AND ENVIRONMENT
INTERNAL AUDIT CHARTER
January 2005
TABLE OF CONTENTS
1.
THE CHARTER ...........................................................................................................................1
2.
NATURE OF INTERNAL AUDIT .............................................................................................1
3.
ROLE AND OBJECTIVE OF INTERNAL AUDIT .................................................................1
4.
WHO DOES INTERNAL AUDIT?.............................................................................................2
5.
INDEPENDENCE.........................................................................................................................2
6.
AUDIT COMMITTEE .................................................................................................................2
7.
AUTHORITY................................................................................................................................3
8.
SCOPE OF INTERNAL AUDIT.................................................................................................3
9.
AUDIT PROGRAM......................................................................................................................3
10.
AUDIT METHODOLOGY..........................................................................................................3
11.
AUDIT REPORTS........................................................................................................................3
12.
LIAISON WITH EXTERNAL AUDITOR ................................................................................4
13.
AUDIT STANDARDS ..................................................................................................................4
14.
QUALITY ASSURANCE ............................................................................................................4
15.
WHO AUDITS INTERNAL AUDIT? ........................................................................................4
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1.
THE CHARTER
This charter outlines the purposes, authorities and responsibilities of the Internal
Audit function in the Department of Primary Industries, Water and Environment (the
"Department").
2.
NATURE OF INTERNAL AUDIT
Internal auditing is the independent appraisal of the various operations and systems of
control to determine whether acceptable policies and procedures are followed,
legislative requirements and established standards are met, resources are used
efficiently and economically and planned missions are accomplished effectively.
It helps the Department accomplish its objectives by bringing a systematic,
disciplined approach to evaluation and improves the effectiveness of risk
management, control and governance processes.
3.
ROLE AND OBJECTIVE OF INTERNAL AUDIT
The internal audit function is established to assist the Secretary and management of
the Department to verify that appropriate governance of operations is in place and to
achieve sound managerial control over all aspects of the operations of the Department
including accounting, financial control, asset management and information
management and control systems.
The overall objective of the program of internal audit is to assist all levels of
management in the effective discharge of their responsibilities by providing
independent analysis, appraisals, advice and recommendations concerning the
activities reviewed.
The attainment of the overall objective may involve:
(a)
reviewing and appraising the adequacy and effectiveness of the system of
internal controls;
(b)
appraising the relevance, reliability and integrity of management, financial and
operating data and reports;
(c)
reviewing the systems established to ensure compliance with those policies,
plans, procedures, statutory requirements and regulations which could have a
significant impact on operations;
(d)
reviewing the means of safeguarding assets and, as appropriate, verifying the
existence of such assets;
(e)
appraising the economy, efficiency and effectiveness with which resources are
employed;
(f)
reviewing operations or programs to ascertain whether results are consistent
with the Department’s established objectives and goals and whether the
operations or programs are being carried out as planned;
(g)
assessing the adequacy of established systems and procedures; and
(h)
conducting special assignments and investigations on behalf of the Secretary
into any matter or activity affecting the probity, interests and operating
efficiency of the Department.
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4.
WHO DOES INTERNAL AUDIT?
The Department shall appoint an external person or company with extensive audit
experience as its Internal Auditor.
5.
INDEPENDENCE
Internal auditing is an advisory function having independent status within the
Department.
The Internal Auditors 1.
shall be directly responsible to the Secretary and the Department's Audit
Committee and be independent of any other section, branch or officer;
2.
shall have no executive or managerial powers, functions or duties except those
relating to internal audit;
3.
shall not be involved in the day to day operation of the Department; and
4.
shall not be responsible for the detailed development or implementation of
new systems and procedures.
6.
AUDIT COMMITTEE
There is an Audit Committee to serve as a channel of communication with the
appointed Internal Auditors.
The Audit Committee shall meet at least two times annually and shall consist of the
following members:
•
the Secretary of the Department;
•
a Deputy Secretary or General Manager as nominated by the Secretary, and
•
an independent member.
A senior auditor representing the Office of the Auditor General may be invited to be
an observer at any of those meetings of the Committee deemed appropriate.
The role of the Internal Audit Committee is to:
(a)
review the proposed scope of the internal and the external audit function;
(b)
review audit performance;
(c)
appraise the effectiveness of the audit by discussing the approach to the
examination and areas where special attention was considered necessary;
(d)
review the management letter provided by the Auditor-General on any
weaknesses in internal accounting, organisation and operating controls, and
consider the recommendations made by the Auditor-General and the action
taken by management in response to the Auditor's suggestions; and
(e)
review and or initiate any other act necessary to ensure:
(i)
compliance with policies, plans, procedures, laws and regulations;
(ii)
safeguarding of Department assets;
(iii)
economic and efficient use of resources;
(iv)
accomplishment of established objectives and goals for operations or
programs; and
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(v)
7.
to draw attention to any failure to take prompt remedial action relating
to previously identified shortcomings.
AUTHORITY
The need for an internal audit function arises from the obligation of the Secretary to
establish an effective internal audit function under Section 22(c) of the Tasmanian
Financial Management and Audit Act 1990.
The Internal Auditors of the Department shall have access at all reasonable times to
all books, documents, accounts, property, vouchers, records, correspondence and
other data of the Department which are necessary for the proper performance of the
internal audit function.
It is incumbent on all Departmental officers that they shall render every assistance to
the Internal Auditors in carrying out their audit duties.
8.
SCOPE OF INTERNAL AUDIT
The Internal Audit coverage may extend to all areas of the Department and include
financial, accounting, administrative, computing and other operational activities.
The extent and frequency of internal audits will depend upon varying circumstances
such as results of previous audits, relative risk associated with activities, materiality,
the adequacy of the system of internal control and the resources available.
9.
AUDIT PROGRAM
A long term strategic audit plan providing for the review of significant operations of
the Department based on an assessment of risk pertaining to the achievement of
Department’s objectives, will be prepared by the Internal Auditors for the
consideration of the Audit Committee.
An annual internal audit plan consistent with the long term strategic plan shall be
prepared by the Audit Committee, prior to the commencement of each financial year.
10.
AUDIT METHODOLOGY
For all audit projects, the manager for the activity under review shall be advised and
given the opportunity to discuss:
(a)
the objectives and scope of the audit to be conducted, prior to the
commencement of such audit; and
(b)
findings and proposed recommendations on the completion of an audit, and
where appropriate make comment.
11.
AUDIT REPORTS AND RECOMMENDATIONS
A written report will be prepared and issued by the Internal Auditors to the Audit
Committee at the conclusion of each audit and will be distributed as considered
appropriate.
Audit reports will normally explain the scope and objectives of the audit, present
findings and conclusions in an objective manner relevant to the specific user's needs
and make recommendations where appropriate.
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12.
LIAISON WITH EXTERNAL AUDITOR
The Internal Auditor will liaise with the Auditor-General to:
1.
foster a cooperative working relationship;
2.
reduce the incidence of duplication of effort;
3.
ensure appropriate sharing of information; and
4.
ensure coordination of the overall audit effort.
The Internal Auditors will make available to the Auditor General all internal audit
working papers, programs, flow charts, and reports.
13.
AUDIT STANDARDS
Internal auditing standards shall be consistent with the Standards for the Professional
Practice of Internal Auditing issued by the Institute of Internal Auditors.
Where applicable internal audit will also have regard to standards and statements
issued by other Australian and international accounting and auditing organisations.
14.
QUALITY ASSURANCE
In order to ensure that the quality of the Internal Audit work is consistently at a high
standard, the Internal Auditor shall develop and maintain comprehensive work
reporting systems.
15.
WHO AUDITS INTERNAL AUDIT?
The Department’s activities are audited by the Tasmanian Audit Office under the
provisions of the Tasmanian Financial Management and Audit Act. The State
Auditor General, as the external auditor, forms an opinion on the financial statements
and also expresses an opinion on the controls in place.
The external auditors review the effectiveness of the internal audit function. They
assess the work done by the internal auditors to determine the extent to which they
can place reliance on the coverage to reduce their audit effort.
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