Internal audit activities are expected to contribute to the improvement of the organization's governance processes. To effectively fulfill this role, internal auditors must work with the board to agree on the scope of their governance assessments. This includes defining the range of activities to be reviewed, the depth of these reviews, and the time period covered. Achieving this agreement ensures that the internal audit's evaluation aligns with the board's expectations and the organization's strategic objectives, thereby enhancing the overall governance framework.
References:
* IIA Standard 2110: Governance
* IIA Practice Guide: Assessing Organizational Governance

The current state of conformance with the Standards for the internal audit activity would be considered as
"Nonconformance with the Standards." This assessment is based on the most recent internal assessment, which showed nonconformance. According to IIA standards, the results of the latest quality assurance review are critical in determining conformance, and any finding of nonconformance indicates that the internal audit activity currently does not meet the Standards, despite previous external assessments to the contrary.
IIA Standard 1300: Quality Assurance and Improvement Program and related interpretation guidelines.

The most appropriate first step for the board to take when developing an effective system of governance is to identify key stakeholders and their expectations. Understanding stakeholders' expectations is fundamental to defining the governance framework that aligns with these needs and establishing the organization's strategic objectives and policies.References: IIA guidance on effective governance frameworks.