The internal audit function is said to be effective when it provides reasonable assurance to stakeholders of an organization (Board Audit Committee, Executive Management, Shareholders or Customers) that management established internal controls (operational controls, IT controls, market or business controls, risk management, etc.) are working optimally and meet the needs and expectations of stakeholders. In doing so, the audit function most use a methodology that sufficiently test these controls and provide measurable metrics of its adequacy and effectiveness.
It is important to note that measurement of effectiveness and efficiency of the internal audit function can be both quantitative and qualitative. This is where obtaining regular independent feedback from key stakeholders on the effectiveness of internal audit functions and how its activities create value for stakeholders is important while adjustments are made where needed.In determining the effectiveness of the internal audit function, below are some of the metrics identified to help in measuring how effective or otherwise the internal audit function is and what forms the opinion of key stakeholders in that direction.