Pat Goodly accepted the CAE position at a large, global organization

with a well-established internal audit function. The organization is

admired as an industry leader and as having very strong corporate

governance practices. The organization's board is predominantly made

up of outside, independent directors. The audit committee is comprised

of outside, independent directors, all of whom are qualified. The chair of

the audit committee is designated as the audit committee's "financial

expert."

The organization's fiscal year-end is approaching; only a little over a

month away. After a brief two months in the new position, Pat is

preparing for the upcoming audit committee meeting. This typically is

the meeting at which next year's internal audit plan and budget would

be presented for approval by the audit committee, as well as any

necessary fiscal year-end reporting.

Recently, Pat received a "welcome" call from the audit committee chair,

indicating "full" support for Pat and the internal audit function. The

audit committee chair expressed an interest in meeting Pat and gaining

an understanding of the vision and direction Pat has for the internal

audit function going forward. The audit committee chair indicated that

periodic communications between them were important and would

allow for open and candid dialog in the future.

Pat was hired by, and currently reports to, the chief financial officer

(CFO). Historically, the audit committee meeting agenda, and related

topic selections for such, have been performed by the CFO. The CFO also

has presided over the meetings in the past.

Senior management, including the CEO and the CFO, expressed support

for the internal audit function and Pat's vision for the function both

during the recruiting process and subsequent to Pat's joining the

organization. However, the CFO firmly stated in a recent staff meeting,

"I know everyone is very busy and things are going to get even more

hectic with year-end upon us. I think it is in everyone's best interest not

to make any 'radical' changes in our organizational reporting structure

until we get through the fiscal year-end closing and reporting cycle. If

we keep our heads down and work hard, we should be able to get

through this year-end okay."

In preparation for the upcoming audit committee meeting, Pat

contemplated the CFO's comments and reflected on The IIA's

professional standards as they relate to the CAE's reporting

responsibilities to management and the board. Put yourself in Pat's

position as the newly hired CAE and consider the following:

A. How should Pat proceed with the audit committee chair? What

obligations does Pat have, if any, to the audit committee chair? As

the CAE, what are Pat's role and responsibilities with respect to the

audit committee and the audit committee chair?

B. Discuss the key issues that must be understood and addressed (and

with whom) to properly discharge any reporting responsibilities

noted.