Does the audit committee supervise the institutions internal auditor, and is the internal auditor subject to removal by the audit committee?
The audit committee oversees the system of internal financial controls, and the internal audit function is subject to the audit committee’s review and supervision. The audit committee and the internal auditor are allowed to communicate directly with one another, without permission or involvement of the institution’s managers, under the audit committee’s authority to supervise the internal control functions. However, unlike with the external auditor, our rule does not give the audit committee regulatory authority to hire or remove an internal auditor, but an institution’s board may choose to do so. Any additional authority given an audit committee should be reflected in the audit committee’s charter.
Related Questions
- Must a System institution’s audit committee pre-approve all nonaudit services or just those performed by the external auditor engaged to conduct the financial statement audit?
- Does the audit committee supervise the institutions internal auditor, and is the internal auditor subject to removal by the audit committee?
- What is the appropriate relationship between the internal audit activity and the audit committee?
