The chief audit executive (CAE), director of audit, director of internal audit, auditor general, or controller general is a high-level independent corporate executive with overall responsibility for internal audit.
Publicly traded corporations typically have an internal audit[1] department, led by a chief audit executive ("CAE") who reports functionally to the audit committee of the board of directors, with administrative reporting to the chief executive officer.
The profession is unregulated, though there are a number of international standard setting bodies, an example of which is the Institute of Internal Auditors ("IIA"). The IIA has established Standards for the Professional Practice of Internal Auditing[2] and has over 150,000 members representing 165 countries, including approximately 65,000 Certified Internal Auditors.[3]
The CAE is intrinsically an independent function; otherwise it may become dysfunctional and of low quality[citation needed] (but there are many degrees in the level of independence and efficiency). The CAE function exists only to constitute a third-level of control in the organisation, which must be independent from the first-level control (the first-level layer belongs to the management of an organisation, who is responsible in the first instance for acting in compliance with the organisation’s rules) and consecutively second-level (which are the supporting units i.e. legal, HR, risk function, financial control etc.). An effective independence is the result of both an attitude of CAE, and of prerogatives/guarantees conceded by the organisation or given by the organisation’s principals (e.g., the board of directors or audit committee).[citation needed]
Because the CAE understands risks and controls, company strategy and the regulatory environment the CAE may assume additional organizational responsibilities beyond traditional internal auditing.[4]