ILRI Internal Audit Charter May 2024 Page 2 of 10 ILRI Internal Audit Charter Revision history Version No. Board committee approval and date Summary of changes Next scheduled review 4.0 ILRI Board Audit, Finance and Risk Committee 14 May 2024 • Reconstitution of the Centre Audit, Finance, and Risk Committee (AFRC) • Alignment with the 2024 Global Internal Audit Standards of the Institute of Internal Auditors (IIA) May 2026 Related documents Global framework: IIA supplemental guidance/Model Internal Audit Function Charter (updated 2024) CGIAR framework/policy ILRI Framework • CGIAR System Internal Audit Function Charter • CGIAR Partnership AFRC Terms of Reference ILRI policy(ies): • ILRI Risk Management Policy • ILRI Audit, Finance and Risk Committee Terms of Reference ILRI procedures CGIAR Internal Audit Standard Operating Procedures/manual Authors: § Chair, Audit Finance and Risk Committee (AFRC) § Director general § Head of Internal Audit Unit Board committee: BOT approval date: Audit Finance and Risk 14 May 2024 Lead manager responsible for operational delivery: § Head of Internal Audit Unit Version: 4.0 Effective date: 14 May 2024 Page 3 of 10 Contents 1. Purpose ................................................................................................................................................ 4 2. Commitment to adhering to the Global Internal Audit Standards ...................................................... 4 3. Authority .............................................................................................................................................. 5 4. Independence, organizational position, and reporting relationships .................................................. 5 5. Scope of internal audit activities: ........................................................................................................ 6 6. Responsibility and resources ............................................................................................................... 8 7. Quality assurance and improvement program .................................................................................... 9 8. Responsibility for reporting irregularities ............................................................................................ 9 9. Board oversight .................................................................................................................................... 9 10. Primary and other audiences ............................................................................................................. 10 11. Signatures .......................................................................................................................................... 10 Page 4 of 10 1. Purpose 1.1 The Internal Audit function is established by the International Livestock Research Institute (ILRI) management under delegated authority from the ILRI Board of Trustees (hereafter referred to as the Board). 1.2 The purpose of the internal audit function is to strengthen ILRI’s ability to create, protect, and sustain value by providing the board and management with independent, risk-based, and objective assurance, advice, insight, and foresight. 1.3 The internal audit function enhances ILRI’s: • Successful achievement of its objectives. • Governance, risk management, and control processes. • Decision-making and oversight. • Reputation and credibility with its stakeholders. • Ability to serve the public interest. 1.4 ILRI’s internal audit function is most effective when: • Internal auditing is performed by competent professionals in conformance with the Institute of Internal Auditors (IIA)’s Global Internal Audit Standards, which are set in the public interest. • The internal audit function is independently positioned with direct accountability to the director general and the Board, and with corporate support from senior management. • The internal audit function understands, respects, meets, and contributes to the legitimate and ethical expectations of the institute and is able to recognize and avoid conduct that is contrary to those expectations. • Internal auditors are free from undue influence and committed to making objective assessments. 2. Commitment to adhering to the Global Internal Audit Standards 2.1 The Internal Audit Unit will govern itself by adherence to the mandatory elements of the IIA's International Professional Practices Framework, which are the Global Internal Audit Standards and Topical Requirements (hereafter referred to as the Standards). 2.2 The Head of Internal Audit will report periodically to senior management and the Board regarding the Internal Audit Unit’s conformance to the Standards, which will be assessed through a quality assurance and improvement program. 2.3 In addition, the Internal Audit function will adhere to the Board approved policies and procedures and the CGIAR Internal Audit function’s standard operating procedures/manual. Page 5 of 10 3. Authority 3.1 The Board grants the internal audit function the mandate to provide the Board and senior management with objective assurance, advice, insight, and foresight 3.2 The Head of Internal Audit will report to the Audit, Finance and Risk Committee of the Board and to the director general. 3.3 The Head of Internal Audit will have unrestricted access to, and communicate and interact directly with the ILRI Board, including in private meetings without management present. 3.4 The Board authorizes the Internal Audit Unit to: • Have full, free, and unrestricted access to all functions, records, property, and personnel pertinent to carrying out any engagement, subject to accountability for confidentiality and safeguarding of records and information. • Allocate resources, set frequencies, select subjects, determine scopes of work, apply techniques required to accomplish audit objectives, and issue communications to accomplish the function’s objectives. • Obtain assistance from the necessary personnel of ILRI as well as other specialized services from within or outside ILRI, in line with the Board approved procurement policies and procedures, to complete internal audit services. 4. Independence, organizational position, and reporting relationships 4.1 The Head of Internal Audit will report to the Audit Finance and Risk Committee of the Board and to the director general. 4.2 The Head of Internal Audit will ensure that the Internal Audit Unit remains free from all conditions that threaten the ability of internal auditors to carry out their responsibilities in an unbiased manner, including matters of audit selection, scope, procedures, frequency, timing, and report content. If the Head of Internal Audit determines that independence or objectivity may be impaired in fact or appearance, the details of impairment will be disclosed to appropriate parties. 4.3 Internal auditors will maintain an unbiased mental attitude that allows them to perform engagements objectively and in such a manner that they believe in their work product, that no quality compromises are made, and that they do not subordinate their judgment on audit matters to others. 4.4 Internal auditors will have no direct operational responsibility or authority over any of the activities audited. Accordingly, internal auditors will not implement internal controls, develop procedures, install systems, prepare records, or engage in any other activity that may impair their judgment, including: Page 6 of 10 • Assessing specific operations for which they had responsibility within the previous year. • Performing any operational duties for ILRI or its affiliates. • Initiating or approving transactions external to the Internal Audit Unit. • Directing the activities of any ILRI employee not employed by the Internal Audit Unit except to the extent that such employees have been appropriately assigned to auditing teams or to otherwise assist internal auditors. 4.5 Where the Head of Internal Audit has or is expected to have roles and/or responsibilities that fall outside of internal auditing, safeguards will be established to limit impairments to independence or objectivity. 4.6 Internal auditors will: • Disclose any impairment of independence or objectivity, in fact or appearance, to appropriate parties. • Exhibit professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. • Make balanced assessments of all available and relevant facts and circumstances. • Take necessary precautions to avoid being unduly influenced by their own interests or by others in forming judgments. 4.7 The Head of Internal Audit will confirm to the Board at least annually, the organizational independence of the Internal Audit Unit. 4.8 The Head of Internal Audit will disclose to the Board any interference and related implications in determining the scope of internal auditing, performing work, and/or communicating results. The disclosure will include communicating the implications of such interference on the internal audit function’s effectiveness and ability to fulfil its mandate. 5. Scope of internal audit activities: 5.1 The scope of internal audit services covers the entire breadth of the organization, including all ILRI’s activities, assets and personnel. 5.2 The scope of the Internal Audit Unit encompasses, but is not limited to, objective examinations of evidence for the purpose of providing independent assurance and advisory services to the Board, management, and outside parties on the adequacy and effectiveness of governance, risk management, and control processes for ILRI. 5.3 The Internal Audit Unit may perform advisory and related client service activities for ILRI, the nature and scope of which will be agreed with the appointing party, Page 7 of 10 provided the Internal Audit Unit does not assume management responsibility. Opportunities for improving the efficiency of governance, risk management, and control processes may be identified during advisory engagements. These opportunities will be communicated to the appropriate level of management. 5.4 Internal audit engagements may include evaluating whether: • Risks relating to the achievement of ILRI’s strategic objectives are appropriately identified and managed. o The actions of ILRI officers, directors, employees, and contractors are in compliance with ILRI’s policies, procedures, and applicable laws, regulations, and governance standards. o The results of operations or programs are consistent with established goals and objectives. o Operations and programs are being carried out effectively and efficiently. o Established processes and systems enable compliance with the policies, procedures, laws, and regulations that could significantly impact ILRI. o Information and the means used to identify, measure, analyse, classify, and report such information are reliable and have integrity. o Resources and assets are acquired economically, used efficiently and sustainably, and protected adequately. 5.5 The Head of Internal Audit will report periodically to senior management and the Board regarding: • The Internal Audit Unit’s purpose, authority, and responsibility. • The Internal Audit Unit’s plan and performance relative to its plan. • Results from the quality assurance and improvement program, which include the internal audit function’s conformance with the Standards and action plans to address the internal audit function’s deficiencies and opportunities for improvement. • Significant risk exposures and control issues, including fraud risks, governance issues, and other matters requiring the attention of, or requested by, the Board. • Results of assurance and advisory services. • Resource requirements. • Management’s responses to risk that the internal audit function determines may be unacceptable or acceptance of a risk that is beyond ILRI’s risk appetite. 5.6 The Head of Internal Audit also coordinates activities, where possible, and considers relying upon the work of other internal and external assurance and advisory service providers as needed. Page 8 of 10 6. Responsibility and resources 6.1. The Head of Internal Audit has the responsibility to: • Carry out the annual audit plan as well as special requests and special investigations at the request of senior management or the Board. • Submit, at least annually, to senior management and the Board a risk-based internal audit plan for review and approval. • Communicate to senior management and the Board the impact of resource limitations on the internal audit plan. • Review and adjust the internal audit plan, as necessary, in response to changes in ILRI business, risks, operations, programs, systems, and controls. • Communicate to senior management and the Board any significant interim changes to the internal audit plan. • Ensure each engagement of the internal audit plan is executed, including the establishment of objectives and scope – with inputs from management, the assignment of appropriate and adequately supervised resources, the documentation of work programs and testing results, and the communication of engagement results with applicable conclusions and recommendations to appropriate parties. • Follow up on engagement findings and corrective actions, and report periodically to senior management and the Board any corrective actions not effectively implemented. • Ensure the principles of integrity, objectivity, confidentiality, and competency are applied and upheld. • Ensure the Internal Audit Unit collectively possesses or obtains the knowledge, skills, and other competencies needed to meet the requirements of the Internal Audit Charter. • Ensure trends and emerging issues that could impact ILRI’s operations are considered and communicated to senior management and the Board as appropriate. • Ensure emerging trends and successful practices in internal auditing are considered. • Establish and ensure adherence to methodologies designed to guide the Internal Audit Unit. • Ensure adherence to ILRI’s relevant policies and procedures unless such policies and procedures conflict with the Internal Audit Charter. Any such conflicts will be resolved or otherwise communicated to senior management and the Board. • Coordinate /work together with other CGIAR internal audit teams on cross- centre audits forming part of the approved annual work plan. • Ensure conformance of the Internal Audit Unit with the Standards. Page 9 of 10 7. Quality assurance and improvement program 7.1. The Head of Internal Audit will develop, implement, and maintain a quality assurance and improvement program that covers all aspects of the internal audit function. The program will include internal and external assessments of the Internal Audit Unit’s conformance with the Standards, as well as performance measurement to assess the internal audit function’s progress toward the achievement of its objectives and promotion of continuous improvement. Also, if applicable, the assessment will include plans to address the internal audit function’s deficiencies and opportunities for improvement. 7.2. The Head of Internal Audit will communicate to senior management and the Board on the unit’s quality assurance and improvement program, including results of internal assessments (both ongoing and periodic) and external assessments. External assessments will be conducted at least once every five years by a qualified, independent assessor or assessment team from outside ILRI; qualifications must include at least one assessor holding an active Certified Internal Auditor® credential. 8. Responsibility for reporting irregularities 8.1. The prevention of irregularities (which include fraud, other illegal acts and errors) rests with management through the implementation and continued operation of an adequate internal control system. Internal Audit Unit is responsible for examining the effectiveness and adequacy of such controls and assisting management in designing appropriate controls that could minimize the risks of irregularities. 8.2. The Head of Internal Audit has the responsibility to report irregularities and allegations of irregularities to the director general and, where appropriate, to the Board. 9. Board oversight To establish, maintain, and ensure that ILRI’s internal audit function has sufficient authority to fulfil its duties, the Audit Finance and Risk Committee and the Board will: • Discuss with the Head of Internal Audit and senior management the appropriate authority, role, responsibilities, scope, and services (assurance and/or advisory) of the internal audit function. • Ensure the Head of Internal Audit has unrestricted access to, and communicates and interacts directly with the Board, including in private meetings without senior management present. • Discuss with the Head of Internal Audit and senior management other topics that should be included in the Internal Audit Charter. Page 10 of 10 • Participate in discussions with the Head of Internal Audit and senior management about the essential conditions, which establish the foundation that enables an effective internal audit function. • Approve the internal audit function’s charter, which includes the internal audit mandate and the scope and types of internal audit services. • Approve the risk-based internal audit plan, as agreed with senior management. • Approve the internal audit function’s human resources administration and budgets. • Collaborate with senior management to determine the qualifications and competencies the institute expects in a Head of Internal Audit. • Authorize the appointment and removal of the Head of Internal Audit. • Provide inputs to management regarding the remuneration of the Head of Internal Audit. • Provide inputs to support the performance review of the Head of Internal Audit. • Receive communications from the Head of Internal Audit about the internal audit function including its performance relative to its plan. • Ensure a quality assurance and improvement program has been established and review the results annually. • Make appropriate inquiries of senior management and the Head of Internal Audit to determine whether scope or resource limitations are inappropriate. 10. Primary and other audiences 10.1. The Internal Audit Charter will be communicated to all staff in the institute to ensure awareness of the rights and duties of the Internal Audit Unit. 10.2. The Head of Internal Audit will periodically review, at minimum every two years, with senior management and the Board, whether the charter needs to be updated and complemented and will seek their renewed endorsement and the approval of the Board. 11. Signatures Position Vice chair, Audit, Finance and Risk Committee Director general Interim Head of Internal Audit Name Appolinaire Djikeng Fredrick Gathogo Signature Date 28 May 2024 28 May 2024 29 May 2024