(MENAFN - Arab News) Philip Tarling, vice president, IA Centre of Excellence, Huawei, said on Saturday that 90 percent of stakeholders indicated that adherence to the standards increased their confidence in internal audit. More than 70 percent believe compliance with the standards is a key factor in the ability of IA to add value to the governance process, he said in reference to Compliance with Professional Standards. However, he said, as yet up to 60 percent of internal audit departments still have not undergone any external quality assessment.
Tarling, who is also a senior vice chairman, Global IIA, was addressing the First Saudi Internal Auditing Forum (SIAF) organized by the Saudi Institute of Internal Auditors (IIA) at the InterContinental Hotel and attended by Minister of Commerce and Industry Tawfiq Al-Rabiah, who is also chairman of the board of directors of the institute, as the guest of honor, and SAMA (Saudi Arabian Monetary Agency) Gov. Fahd Al-Mubarak.
In his keynote speech, Al-Rabiah expressed Saudi Arabia's keenness to go through its development plan and program go along with professionalism that would boost its positive outcome in terms of national economic performance and address the role of checks and balances on enterprises.
In this context, he pointed out that Saudi Arabia has taken a number of important steps that include issuing a decree to create auditing committees at the listed companies. It also issued a decree on May 16, 2001 by the board of Saudi Authority for Auditing in which Internal Auditing has been created for the development of auditing standards.
In his opening speech, Al-Mubarak said: "Issuance of the resolution by the Council of Ministers to create Saudi Internal Auditing was a dream for many of us. It is aimed at playing a pivotal role in boosting, controlling and transparency of the performance of the business sector and keep pace with the developments taking place in the internal auditing profession globally.
At the outset, IIA has taken action on building major foundation, including preparation of its internal bylaws, both financially and administratively. The association during this period organized a number of professional meetings across the Kingdom.
The IIA objectives, among others, are to develop the internal auditing profession in the country and play an active role in strengthening transparency and improving professional efficiency of various organizations in a way to further bolster the fundamentals of the Kingdom's economy, said Al-Mubarak.
The first session was presided over by Abdulmohsen bin Abdulaziz Al-Fares, CEO - Alinma Bank. Other speakers were Abdulaziz Al-Furaih, senior executive vice president, Riyadh Bank, and Khalid Al-Faddagh, general auditor, Saudi Aramco. Abdul Qader Obaid Ali, president, United Arab Emirates Institute of Internal Auditors, was also present.
In his presentation, "Improving the Quality of performance of the Internal Audit
activity," Tarling said: "If surveyed today about how well internal auditing is
meeting its needs and expectations, my audit committee/executive management would
probably rate their overall satisfaction..."
Quoting surveys of directors and managers, he said: "74 percent believe internal audit needs improvement and 96 percent believe this needs to be within the next 24 months. 44 percent believe internal auditing helps achieve business objectives, 37
percent are involved in internal auditing in key business decisions and strategy, 32 percent believe internal audit attracts future leaders and high potential talents from within the business."
The speaker said the emerging concerns from management included "Internal auditors don't understand the business," "Internal auditing is too tactical," "Audit
results take too long and don't add a commensurate level of value," and "Internal
auditor's quality isn't where it needs to be." Referring to the emerging concerns
from audit committees, he said they were wide and varied: "CAEs don't always have the executive presence needed," "Internal auditors are not always effective
communicators," and "Internal audit needs to synthesize its results better and connect the dots."
According to him, the CBOK Study of Stakeholders in 2010 told us: "Almost 50 percent of respondents believe that internal auditing does not excel at developing talent for leadership positions throughout the organization. With directors, this is 42 percent."
He said the CAE regularly communicated with senior management and the board. As for the emerging risks facing the enterprise, there were systemic trends on risks and controls gleaned from audit results. He should understand and monitor talent and needs, identify effective talent sources, and recruit, develop and retain outstanding talent.
He maintained that that there should be a risk assessment process that gives current risk profiles beyond an annual risk assessment process. The auditors should have a continuous component, formalized within internal audit/aligned with business units. Risk assessments are transparent and interactive, involving senior management, external auditors, and the audit committee. Emerging risks are identified and addressed, he said.
As for Comprehensive Quality Assurance and Improvement Program, he said it
covers commitment to quality that extends beyond conformance to IIA standards and formal quality assurance and improvement program including continuous quality
controls, periodic formal internal assessments, periodic external assessments that
include extensive benchmarking and insight on how internal audit compares with peers..
In his presentation entitled "Improving the Quality of performance of the Internal Audit activity," Tarling said: "If surveyed today on how well internal auditing is meeting its needs and expectations, my audit committee and executive management would probably rate their overall satisfaction.
Surveys of directors and managers tell us 74 percent believe internal audit needs improvement, 96 percent believe this needs to be within the next 24 months, 44 percent believe internal auditing helps achieve business objectives, 37 percent involve internal auditing in key business decisions and strategy, 32 percent believe internal audit attracts future leaders and high potential talent from within the business.
The outlined the emerging concerns from management as "Internal auditors don't understand the business," "Internal auditing is too tactical," "Audit results take too long and don't add a commensurate level of value," and "Internal auditing quality isn't where it needs to be."
About the emerging concerns from audit committees, he said: "CAEs don't always have the executive presence needed," "Internal auditors are not always effective communicators," and "Internal audit needs to synthesize its results better and connect the dots."
The CBOK study of stakeholders in 2010 told us: Almost 50 percent of respondents believe that internal auditing does not excel at developing talent for leadership positions throughout the organization. With directors this is 42 percent.
With Audit Committee chairs it is 50 percent and with CFOs it is 62 percent. Almost a third do not believe that internal audit has a role to play in strategic risk. "Our CAEs tell us "We are doing well." The CEOs and Audit Committees say: "You need to do a lot better, who is right? It doesn't matter - we have to be relevant."
