Friday 29 Mar 2024
By
main news image

KUALA LUMPUR: Internal auditors must step up their roles and become agents of change to manage governance, risk and compliance (GRC) for organisations, said Institute of Internal Auditors (IIA) Malaysia’s newly-appointed president Datuk Shabaruddin Ibrahim.

shabaruddin_internal_ded01092015_theedgemarkets

That’s because the role of internal auditors has become even more significant now, given the weak global economic conditions.

“Since the 1997-98 Asian financial crisis, the role of the internal auditors has certainly advanced in terms of scope, responsibilities and value added to the organisations. In fact, it is a requirement by Bursa Malaysia for listed corporations to have an internal audit function and that in itself is a big statement on the importance of internal auditors,” he told digitaledge DAILY in an interview.

It was reported that listed local companies will be facing greater scrutiny in their financial operating for audit periods ending Dec 15, 2016 (FY16) onwards, as The International Auditing and Assurance Standards Board will be introducing new and amended auditing standards, which include a revision in the external auditors report to include a “key audit matters” paragraph.

“The internal auditors’ role will be enhanced with this amendment to the external auditors report, as part of the external auditors’ role is to have discussions with the internal auditors on internal control issues facing an organisation,” said Shabaruddin.

He also stressed that it is important for companies, especially public-listed ones, to realise the importance of having their own in-house internal audit function.

“There are pros and cons to outsourcing the internal audit function. It may be cheaper to outsource, but it is better that the internal function comes from within because then it becomes embedded in the corporate culture of an organisation,” said Shabaruddin.

According to the Analysis of Corporate Governance Disclosures in Annual Reports 2012-2013 by Bursa Malaysia, the regulator noted that it is vital that listed companies have a framework for internal auditors to follow.

“Where the summary of internal audit activities is concerned, it is commendable that many listed issuers disclosed that they have adopted a risk-based approach to internal auditing or have followed the globally recognised audit methodology, for example, the International Professional Practices Framework (IPPF), as the basis of their internal audit work,” stated Bursa Malaysia.

On this, Shabaruddin said some corporations had sought the advice of IIA Malaysia when it comes to the scope of their internal audit work.

“We do give corporations advice on internal control reporting, based on the IPPF framework, the challenge for corporations when it comes to internal audit is the understanding of the internal control, this is where IPPF comes into play as it serves as a guide for the internal audit function,”he said.

Shabaruddin , who was formerly the group chief internal auditor of Petroliam Nasional Bhd, stressed that it is important that internal auditors begin to invest in themselves as the function has become a vital part of corporate governance.

He added that a setback that internal auditors have is that there is no regulating body for the profession, such as the Malaysian Institute of Accountants, which regulates the accountancy profession.

On its part, IIA Malaysia has a professional development committee that organises training and development programmes for internal auditors who are its members.

The institute is also organising a 2015 National Conference on Governance Risk and Control, which will be held on Sept 7 and 8. The two-day conference, which is aimed at gearing practitioners of governance, risk and control to be more adept to the evolving business landscape, will feature discussions on governance issues by industry experts such as Auditor-General Tan Sri Ambrin Buang and winner of The Apprentice Asia Jonathan Yabut.

 

This article first appeared in digitaledge Daily, on September 1, 2015.

      Print
      Text Size
      Share