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President's message

November 2016

Managing Stakeholders’ Expectations
In today’s environment, organisations seek value from internal audit (IA) functions and expect more than an assurance report on internal controls. 
 
At the IIA Singapore’s Global IA Leadership Summit and the Asian Confederation of Institutes of Internal Auditors (ACIIA) Conference last week (16-18 November), there were many useful insights from speakers, panelists, IA practitioners and IA stakeholders who participated in the conference. Just to summarise 4 key takeaways relating to managing stakeholders’ expectations, with words that start with “C”:
 
“Collaborate” – Building collaborative relationships with stakeholders is important and relationship acumen is a key attribute for IA leaders. To quote Richard Chambers in his book “Lessons Learned on the Audit Trail” - “A confident and courageous CAE who spends time building relationships can negotiate a middle ground that meets the goals of both board and management in the long run”
 
“Communicate” - Communicate and provide insights and advice to stakeholders in areas that resonate with their concerns and build trust. Engage stakeholders continuously to bridge any gaps in expectations and priorities. Frequent face-to-face meetings and discussions are important. Not just written communication.
 
“Customers” – The IIA Research Foundation and Protiviti has published a Stakeholder Survey “Voice of the Customer” in July 2016. It contains recommendations from stakeholders on best practices that internal auditors should consider in their quest to continually improve performance and bring value to their organizations.
 
“Change” – IA must keep up with change. Feel the pulse of the organisation and its internal and external environment. Focus on high impact areas. Leverage on technology to devise new and efficient ways of auditing.
 
Other important “C”s are courage, conviction, continuous monitoring, culture, critical thinking, cyber security, connecting the dots, coordination, competencies and the list goes on….
 
Yours Sincerely
Tan Boon Yen
President

 

October 2016

Scaling New Heights In Governance
The Internal Audit Excellence Award was presented at the Securities Investors' Association (Singapore) (“SIAS”) Investors' Choice Awards dinner on 30 September 2016. IIA Singapore congratulates this year's award Keppel Corporation Limited and the Runners-Up, City Development Limited and Fraser & Neave, Limited.  
 
It is important to recognise the value that IA brings to the organisation and its stakeholders. IA provides objective assurance and insight on the effectiveness and efficiency of governance, risk management and internal control processes. IIA Singapore applauds SIAS in raising awareness of the investor community on the role of IA in protecting and enhancing long term shareholder value.
 
All organisations should work towards “Scaling New Heights in Governance”. This is the theme of the upcoming Asian Confederation of Institutes of Internal Auditors (“ACIIA”) Conference 2016 on 17 & 18 November 2016 at the Marina Bay Sands Expo & Convention Centre. IIA Singapore is proud to be the host country this year and look forward to welcoming our foreign delegates.  This year’s Global Internal Audit Leadership Summit (GIALS) will be held on 16 November 2016 and 200 IA leaders from Singapore and around the region are expected to converge at the summit.
 
We are very honoured to have Ms. Angela Witzany, the 2016-17 IIA Global Chairman of the Board and Mr. Richard Chambers, IIA Global President and CEO at the conferences. We have a line-up of regional and global speakers and topics that are insightful and relevant to the current business and economic climate e.g. “Combating Money Laundering through Governance”, “Navigating Technology Risks”, “Cybersecurity Landscape and Asia”, “Data and Analytics” and “Proactive Fraud Analysis”. 
 
The 3-day event will end with our 40th year anniversary Gala Dinner on 18 November 2016. This year’s event will especially memorable and exciting and we look forward to seeing everyone to catch up and have a great time!
 
Yours Sincerely
Tan Boon Yen
President

September 2016

Investing in Yourself
One of IIA Singapore's vision is to develop the skills of internal auditors through education and professional development. Through the IIA Singapore Academy, we aim to raise the professional competency of IA professionals as well as the wider communities of risk management and finance professionals.  Guided by The IIA Global Internal Audit Competency Framework consisting of 10 core competencies, the IIA Academy identifies and designs seminars suited for each broad job level, namely internal audit staff, internal audit management, and the chief audit executive. In 2015, about 60 seminars were organized by our IIA Academy using the Competency Framework.
 
In the 2016 Global Internal Audit Common Body of Knowledge (CBOK) study, the world’s largest ongoing study of the internal audit profession with 14,518 respondents, “analytical/critical thinking” and “communication skills” were identified as the top two skills Chief Audit Executives survey respondents have expressed to be skills that they are recruiting or building the most in their internal audit department.  The IIA Academy will continue to include seminars to upskill the participants in the areas. The study also showed that about 4 out of 10 survey respondents received less than 40 hours of training per year, which is below the required level to maintain many IIA certifications. The Continuing Professional Education (CPE) requirement of 40 hours is the annual guideline for practising CIA-certified professionals. With the reporting deadline being 31 December each year, all are encouraged to plan for the continual update in various competencies.
 
I am happy announce that IIA Singapore has successfully secured the ISCA-CIA Challenge Exam which is a one-off accelerated pathway offered to qualified members of The Institute of Singapore Chartered Accountants (ISCA), to earn the certification upon passing one condensed exam.  The exam application period is from 1 September to 31 October 2016. 
 
It is important for all of us to continue to invest in ourselves to develop professionally and progress in our career. 
 
Yours Sincerely
Tan Boon Yen
President
 

August 2016

Celebrating the 75 th Anniversary of IIA
The Institute of Internal Auditors (IIA) celebrated its 75th anniversary in New York during the week long events from July 16th to 20th at the Global Council meeting and the IIA International Conference. Established in 1941, the membership of IIA has grown to more than 180,000 representing more than 170 countries. 
 
As members of IIA, it is a great time to commemorate the effort and commitment of the global institute for the journey and outstanding achievements towards its vision that “Internal Audit Professionals will be universally recognized as indispensable to effective governance, risk management and control”.  IIA’s efforts in driving professionalism as been outstanding e.g. 1) professional certifications, standards and guidance, 2) research, studies and surveys e.g. the CBOK reports by the IIA Research Foundation and 3) thought leaderships publications/forums e.g. the Global Pulse of the Profession and the IA magazine.
 
Ms Angela Witzany, the head of internal audit at Sparkassen Versicherung AG, takes over as Chairman of the IIA Global Board of Directors for 2016-2017 in July 2016. Under her chairmanship, she has adopted the theme "Audit Never Sleeps" to express the constant vigilance that practitioners must embrace to identify and respond to risks that can threaten their organisations. Ms. Witzany will be delivering the opening address at the Asian Confederation of Institutes of Internal Auditors (ACIIA) Conference in Singapore on 17 and 18 November 2016.  Just a reminder to also sign-up early for this conference to catch the early bird rates which closes mid September.
 
The IIA Singapore’s Annual General Meeting (AGM) is coming up soon on Tuesday, 30 August 2016 at the Singapore Marriot Tang Plaza Hotel at 6:30pm. This year is also our 40th anniversary which is themed “Building Collaborative Relationships”.  Do save the date to attend the AGM and look forward to catching up with members.
 
Yours Sincerely
Tan Boon Yen
President
 

July 2016

Combined Assurance Approach on Effectiveness of Internal Controls
A recent review was commissioned by the Singapore Exchange (SGX) to examine the annual reports of 545 mainboard listed companies for fiscal year between July 1, 2014 to June 30, 2015 with the intent of using the results to help companies improve their disclosures and overall governance standards. One of the key observations was that while 95 per cent of the companies indicated that an internal audit (IA) function exists, only 53 per cent disclosed the effectiveness of internal controls. 
 
Internal control as defined by the COSO framework is a process, effected by an entity's board of directors, management and other personnel. It is designed to provide reasonable assurance regarding the achievement of objectives relating to effectiveness and efficiency of operations; reliability of financial reporting and compliance with applicable laws and regulations. 
 
To assess the effectiveness of internal controls, it is important to apply the combined assurance framework. The assurance should be provided collectively by the board, senior management and other internal assurance providers supporting management are risk management, internal control and compliance functions. However, based on the IIA Research Foundation’s Global IA Common Body of Knowledge (CBOK) 2015 Practitioner Survey, it was noted that globally, only 59% of respondents were aware of combined assurance , and in East Asia and Pacific, the percentage was 50%. 
 
IA as an independent function that reports to the audit committee plays an important role in facilitating or coordinating the combined assurance framework. 
 
At the same time, it is also important for organisations to be aware that internal control is not a panacea that provides complete assurance. It can only provide “reasonable assurance” due to inherent limitations in all internal control systems e.g. the human frailty in making business decisions, circumvention of internal controls by the collusion of two or more people and management override of internal controls.
 
Yours Sincerely
Tan Boon Yen
President
 

June 2016

Anti-Money Laundering (AML) Reviews

In the recent news of BSI Bank being asked by MAS to shut down its merchant bank operation in Singapore, we are reminded that with the growing global terrorists and organized crime threats and regulatory requirements, breaches of Anti-Money Laundering (AML) rules should be taken seriously as it could result in fines, criminal charges and also removal of the bank’s license to operate. 

Banks are required to establish AML programmes that include Know Your Customer (KYC) procedures to prevent banks from being used for money laundering activities. In Singapore, there are AML Laws and Regulations that requires banks operating in Singapore to establish robust procedures that would not only detect but also deter the flow of illicit funds through the local financial system. Failures in the governance or lapses in AML controls would expose the banks to reputational, operational and compliance risks. 
 
In the assessment of AML risks, it is important for compliance and internal audit functions to assess not only policies, systems and processes but also the people and other intangible aspects of the organisation. The organisational culture and tone at the top influences the level of control consciousness of people within the organisation. It is necessary to evaluate management’s philosophy and operating style and commitment level to integrity and ethical behavior. It is necessary to get a good understanding of the internal and external operating environment that could have an impact on senior management’s approach in taking business risks, meeting budgets, profit and other financial and operating goals. 
 
To keep up with the escalating concerns and regulatory pressures, Internal Audit departments should work closely with their stakeholders to review the robustness of the organisation’s AML programme and monitoring compliance.  It is also important to review the organisation’s governance structure to ensure that there is a clear commitment from the top and independent channels to report unethical practices or violations.
 
Yours Sincerely
Tan Boon Yen
President

 

May 2016

May is International Internal Audit Awareness Month
May is International Internal Audit Awareness Month and it is a great opportunity to promote the value of internal audit to our customers, executive management, board of directors and other stakeholders. For example, organisations can hold lunch-and-learn sessions with staff at all levels of the organisation to share what is the purpose of internal audit, how it is an integral part of the organization and also, very importantly, the value proposition of internal audit to the stakeholders.  The IIA Singapore (IIAS) has been invited to attend such an event organised by one of the Internal Audit Department in Singapore and the expected turnout is 150! 
It is important for internal audit (IA) functions to share their broader role and how the organisation as a whole, can tap on IA capabilities and resource, not only in strengthening of internal controls and governance, but also to provide objective assessments and insights into their businesses and operations. IA also focuses on alignment of business, operations and goals. Good collaborative efforts with management, business and operating teams pave the way for continuous review and improvements of performance, operations, processes and systems. Internal auditors of today are no longer accountants by training. Rather, they are from diverse backgrounds and skill sets such as business and industry specific knowledge, IT and data mining and analytics. They have a broader focus that includes risk management, operational efficiencies and effectiveness and compliance management, and are important business advisors and change catalysts. 
In celebration of the International Internal Audit Awareness Month, IIAS has organised an interesting evening talk cum networking event (find out more or register here) on 26 May 2016 where internal auditors can bring their auditees/clients, CEOs, CFOs, AC members, etc, to join them for the evening, mingle and enjoy the food & drinks.  
Do not miss the unique opportunity to interact with your IA stakeholders and do mark your calendars and sent them an invite soon!!
 
Yours Sincerely
Tan Boon Yen
President

April 2016

Productivity and Innovation
The Singapore Budget 2016 focuses on economic transformation and building a caring and resilient society and sees the launch of a new $4.5 billion “Industry Transformation Programme”. The budget seeks to help enterprises scale and internationalize, automate to build capacity, encourage innovation and provide a broad range of support to small, medium size enterprises (SMEs). The government sees that all business, large or small, have to compete on productivity and innovation.
 
How can we align IA efforts in help to improve productivity in organizations? Productivity encompasses both effectiveness and efficiency. Firstly, IA functions themselves must look at how they can improve efficiency and effectiveness of IA processes. With the advent of technology and big data, IA has to leverage on audit tools and technology to perform audits effectively and efficiently. In its assurance role, IA function should also consider what is important to help their organizations to improve productivity. IA should capitalize on its knowledge of the organization, the people, functions, systems and processes, to provide recommendations to improve effectiveness and efficiency of operations. In assessing the adequacy of controls, IA should also consider what are cost-effective controls better balance both effectiveness and efficiency.
 
The IIA Singapore’s 2016 Public Sector Internal Audit Conference will be held at Marina Bay Sands, Sands Expo and Convention Centre this week i.e. April 21 & 22. The conference covers topics ranging from Cyber Security, Innovation, Fraud to Data Analytics with panel discussions on “How IA can be innovative to enhance and protect organisational value?” and “How can IA stay relevant in the changing world?” The panel session will provide insights on leading practices in IA, views on innovation and how it relates to IA, the barriers to innovation and the staff qualities to facilitate innovation. We look forward to another fruitful conference and look forward to seeing you there.
 
Yours Sincerely
Tan Boon Yen
President
 

March 2016

Proposed Changes to Internal Audit Standards
The Institute of Internal Auditors (IIA) has announced proposed changes to its International Standards for the Professional Practice of Internal Auditing (“Standards”) on 1 February 2016. An online survey for you to comment during a 90-day exposure period, ending on April 30. 
 
The International Professional Practices Framework (IPPF) mandatory guidance is subject to review at least once in every three years. This review will incorporate the new mandatory guidance i.e. the Core Principles. With the continuous and rapid changes in our business environment, the demands on internal audit have correspondingly increased. 
 
The proposed changes also incorporates new Standards that address the need for CAE’s to take on roles extending beyond internal auditing. There is a need to address situations where objectivity may be impaired when assurance projects are subsequently undertaken for the same areas that internal audit undertaken a consulting role. Other than providing clarity on some requirements in the existing standards, the proposed enhancements also include the alignment of existing Standards with the new set of Core Principles that was incorporated into the IPPF last year, the Quality Assessment and Improvement Program and the communication between CAE, the board, and senior management.
 
Do participate in the review as your feedback is important to ensure that the proposed Standards sufficiently support the demands of the profession, its practitioners, and your stakeholders. Inputs submitted will be reviewed and considered before final revisions are approved in the third quarter of 2016. The revised Standards will become effective on 1 January 2017. IIA Singapore will be conducting a lunch time talk on 29 March 2016 to provide an overview on the proposed changes. Do save the date to attend.
 
Yours Sincerely
Tan Boon Yen
President

 

February 2016

Building Collaborative Relationships
As the Lunar Year of the Monkey swings its way into our lives, let us all have a year filled with an abundance of joy, prosperity and good luck!! The IIA Singapore (IIAS) turns 40 this year and we look forward to kick off our 40th anniversary with our annual Lunar New Year Lo-Hei luncheon on 19 February 2016.
 
With the uncertainties and slow down in many economies, businesses need to be agile to effectively manage the risks and seek opportunities in a more challenging climate. For Internal Audit (IA) to effectively discharge its responsibilities in evaluating and improving the effectiveness of risk management, control and governance processes, it needs to work closely with its stakeholders to better align it focus and anticipate emerging risks. Recognizing the importance of this, IIAS plans to organise various events that also involve the IA stakeholders e.g. the Audit Committee (AC) and senior management, to provide a forum for interaction. Frequent and open communications with stakeholders are necessary not only for IA to better understand their expectations, but also for IA to “market” its capabilities and initiatives and share valuable insights so that stakeholders better appreciate the value of IA. To quote a couple of points made at the 2015 Asia Internal Audit Leadership Programme (jointly organised by the Singapore Accountancy Commission and IIAS) which aptly describes the need for IA to build collaborative relationships - a) “IA can exercise influence though they do not hold formal authority” and b) “Influence trumps authority. Exercise a firm but moderating influence so as to bring people along with the plan while ensuring the plan is feasible and practical”.
 
Let us all work towards building and managing effective stakeholder relationships. I would like to wish all a smooth sailing 2016 despite the ups and downs that we should take in our stride.
 
Yours Sincerely
Tan Boon Yen
President

 

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