Definition
The chief audit executive (CAE) is the person in charge of the internal audit function, whatever the actual job title. The CAE develops the charter, builds a risk-based plan, manages resources, communicates results to the board and senior management and maintains a quality assurance and improvement program. The CAE reports functionally to the board, which approves the charter, plan and resources, while administrative reporting is typically to a senior executive.
Why it matters in an audit or review
The CAE's reporting line and access to the audit committee are central to independence. External auditors speak with the CAE in understanding the entity and its monitoring activities, and when considering whether to use internal audit's work.
Example
Illustrative: an external auditor meets the CAE at planning, reads the annual plan and asks which areas internal audit will test in the second half of the year. That timing affects how much the auditor can use the work.
Common mistakes
- Treating a CAE who reports to the CFO alone as fully independent of management.
- Assuming the CAE role exists only in large companies. Smaller entities may outsource or co-source it.
Sources
- The IIA, Global Internal Audit Standards (2024), Domains III and IV, https://www.theiia.org
- AICPA, AU-C Section 610, Using the Work of Internal Auditors
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error