As assurance experts, internal auditors appreciate that monitoring performance is an essential internal control to achieve outcomes. To this end, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) has recognised monitoring activities as a critical element of internal control.  

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Pitt Group worked with a large internal audit function to develop key performance indicators for their quality assurance and improvement program. Although the function had existing measures, the audit committee had expressed concerns that these needed to be aligned with the internal audit strategy and charter.

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Pitt Group consulted with the Chief Audit Executive (CAE) and key stakeholders, including the audit committee and senior executives, to understand their interpretation of internal audit success. Pitt Group then compared the success measures identified through these conversations with the internal audit strategy and charter and used these as the basis for new measures.

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Pitt Group proposed a suite of measures that covered the following:

• the adequacy of inputs to the internal audit function 

• the efficiency and effectiveness of critical activities undertaken by the internal audit function 

• the outputs and outcomes (impact) delivered by the internal audit function. 

 

Pitt Group reduced the number of measures from fourteen to eight and enhanced alignment with the strategy and charter. Pitt Group kept the measures as simple as possible, and ensured they conformed with “SMART” principles (specific, measurable, achievable, relevant and time-bound) and were agreed with the audit committee. Pitt Group then worked with the CAE and audit team to develop mechanisms for reporting against the measures, including a data visualisation dashboard.