What is Internal Audit Charter

INTERNAL AUDIT CHARTER AGREEMENT

THIS INTERNAL AUDIT CHARTER AGREEMENT (the "Charter") is entered into as of this [Day] day of [Month], [Year] (the "Effective Date"), by and between [Company Name], a corporation organized and existing under the laws of [Jurisdiction], with its principal place of business at [Address] (the "Company"), and the Internal Audit Department, represented by the Chief Audit Executive ("CAE") (collectively, the "Parties").

RECITALS

WHEREAS, the Board of Directors (the "Board") of [Company Name] recognizes the necessity of an independent, objective assurance and consulting activity designed to add value and improve the Company’s operations; WHEREAS, the Parties desire to establish the formal purpose, authority, and responsibility of the Internal Audit function in accordance with the International Standards for the Professional Practice of Internal Auditing; NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Parties agree as follows:

1. OPERATIONAL DEFINITIONS

1.1. "Audit Engagement" means a specific assignment, project, or review activity performed by Internal Audit. 1.2. "Chief Audit Executive (CAE)" means the highest-ranking officer responsible for the internal audit activity. 1.3. "Independence" means the freedom from conditions that threaten the ability of the internal audit activity to carry out its responsibilities in an unbiased manner. 1.4. "Internal Audit Activity" means the department, division, or consulting team tasked with providing independent assessments of the Company's risk management, control, and governance processes. 1.5. "Management" means the executive leadership team responsible for the day-to-day operations of the Company.

2. SUBSTANTIVE TERMS & OBLIGATIONS

2.1. Purpose. The Internal Audit Activity is established to assist the Board and Management in accomplishing the Company’s objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. 2.2. Authority. The Internal Audit Activity is authorized to have full, free, and unrestricted access to any and all of the Company’s records, physical properties, and personnel relevant to any function under review. 2.3. Scope of Work. The scope encompasses the examination and evaluation of the adequacy and effectiveness of the Company’s governance, risk management, and internal control processes, as well as the quality of performance in carrying out assigned responsibilities. 2.4. Performance Metrics. The CAE shall provide the Audit Committee with a report of the internal audit plan performance, resource management, and the results of any significant audit findings on a quarterly basis. 2.5. Representations. The Internal Audit Activity represents that all audits shall be conducted in accordance with the Code of Ethics and the Standards for the Professional Practice of Internal Auditing.

3. DEFAULT, TERMINATION, AND REMEDIES

3.1. Breach. A material breach occurs if any party fails to perform its obligations under this Charter, including the obstruction of audit access or the failure of the CAE to report material risks to the Audit Committee. 3.2. Notice and Cure. The non-breaching party shall provide written notice of the default. The breaching party shall have thirty (30) business days from the receipt of such notice to cure the breach. 3.3. Termination. This Charter may be terminated by the Board of Directors upon a vote of a majority of independent directors, provided that such termination is consistent with applicable regulatory requirements. 3.4. Remedies. In the event of an uncured breach, the affected party may seek injunctive relief or specific performance, in addition to any other remedies available at law or in equity, limited to a maximum liability cap of $[Dollar Amount].

4. BOILERPLATE LEGAL PROVISIONS

4.1. Severability. If any provision of this Charter is held to be invalid or unenforceable, the remaining provisions shall continue to be valid and enforceable. 4.2. Entire Agreement. This Charter constitutes the entire agreement between the Parties and supersedes all prior representations or agreements. 4.3. Force Majeure. No party shall be liable for failures in performance caused by acts of God, war, terrorism, or other events beyond their reasonable control. 4.4. Governing Law. This Charter shall be governed by and construed in accordance with the laws of [Jurisdiction], without regard to its conflict of laws principles. 4.5. Dispute Resolution. Any dispute arising out of this Charter shall be submitted to binding arbitration in [City, State] in accordance with the rules of the American Arbitration Association.

5. FORMAL EXECUTION

IN WITNESS WHEREOF, the parties have caused this Charter to be executed by their duly authorized representatives as of the Effective Date.

FOR [COMPANY NAME]:

Signature: __________________________ Name: [Name of Executive] Title: [Title] Date: ______________________________

FOR INTERNAL AUDIT DEPARTMENT:

Signature: __________________________ Name: [Name of CAE] Title: Chief Audit Executive Date: ______________________________