2020 is used as a milestone by countries and organisations to set a vision and measure progress. The Singapore accountancy sector aims to transform into the leading global hub for Asia-Pacific by 2020; and where we are concerned - to develop into a Centre of Excellence in Internal Audit, a platform for leading professional development and certification that will attract professionals from the region. As the profession’s standard-setter and chief advocate, IIA Singapore is working closely with the Singapore Accountancy Commission (SAC) to achieve this vision. 2020 may seem far away, but in reality there are only six years to go. We welcome members’ inputs on how we can further raise the bar for the profession.
Leading to 2020, how will the expectations of our stakeholders evolve? During one of our recent events, a member wryly reminisced to me that at the start of her IA career in the 1980s, the function required traditional financial and operational assurance skills. Almost two decades later, her role has inevitably blossomed to include a rainbow of skill sets which include strong business acumen, relationship management and change management. Acknowledging this, I could not help but imagine the possibilities which could surface in the next six years. Will more and more countries, including Singapore, make IA a necessary function? Will IA’s voice and “seat at the table” be secured, maintained and strengthened? What will make up the DNA of a “high-performing” IA team in year 2020?
2020 will naturally be the year we gauge where IA stands in the Asia-Pacific region as Singapore moves steadily towards its quest to be a global accountancy hub and a Centre of Excellence in Internal Audit. Some risks which could derail the profession's resolute march towards this vision - for example: not meeting stakeholder expectations, lagging behind other assurance functions, and failure to focus on high-risk areas which can lead to corporate failure and the oft-repeated question, “Where were the Internal Auditors?” It is important that we manage these risks well, so that when 2020 comes round, the internal audit profession as a whole can acknowledge with confidence that they are well-positioned to serve their stakeholders.
I wish you all a Blessed Lunar New Year,
The highlights of Budget 2014 reflect the government’s continued focus on increasing productivity through upgrading of skills, automation and innovation across businesses. Economic restructuring and business transformation are important in order to maintain Singapore’s competitiveness. While businesses undergo a journey of transformation with the government 's financial packages, the importance of having effective controls over the use of funds to invest in technology and CAPEX is one vital aspect of governance that senior management should pay attention to.
In this respect, Internal Audit has a crucial role to play. IA provides independent assurance to senior management that the CAPEX planning process in the organisation is operating effecti vely. IA can help to review that the projects identif ied and prioritised are aligned with business strategy. IA can also add value by providing independent advice on whether the business has maximised all available tax deductions and subsidies by the government. While being involved, Internal Audit must retain a bird’s eye view and maintain their independence at all times.
To be effective and value-adding in this dynamic and evolving business landscape, Internal Auditors together with other assurance professionals in the organisation must equip themselves with the right capabilities, skills and expertise to be a valuable resource to senior management and the Board . In turn, senior management and the Board must also ensure that these internal assurance providers are adequately staffed, resourced and developed professionally so that they can effectively support business growth.
An effective internal audit is the cornerstone of good governance. From what I understand, Internal Auditors who make things happen are characterised by a trilogy of sights: Oversight, Insight and Foresight. When these oversight, insight and foresight elements are inherent in internal auditing, IA effectiveness would become visibly versatile. Its effectiveness comprises two parts, namely, internal auditor effectivenessand internal audit function effectiveness.
On oversight, it assures that the implemented policies and overall performance are met as planned and within the governance framework. Through insight, it provides independent assessment on the effectiveness, efficiency and economy of the processes. And lastly, foresightrequires identifying trends, threats and emerging challenges etc so as to pre-empt serious harm from affecting the organisation.
As an effective internal auditor, he/she must demonstrate competency, independence and objectivity without compromising integrity and confidentiality. More importantly, Internal Auditors must continuously upgrade and keep abreast with new and changing developments in the market to enable effective auditing.
For the internal audit function to be effective in executing activities, it has to be sufficiently resourced with tools and competent staff to evaluate significant risks, appropriately positioned with sufficient organisational authority, and have a close link with management and the board to understand their business concerns and issues in order to be effective. It has to develop skills and capabilities such as risk management, forensic fraud, IT etc to respond to crises.
Effective Internal Auditors who have Oversight, Insight and Foresight, as well as Internal Audit functions which are run effectively, will be ready to contribute fruitfully to the organisation and assist management and the board to discharge their responsibilities well.
I am sure that most organisations, big or small, would have Key Performance Indicators (KPIs) and Key Risk Indicators (KRIs) which are aligned to their mission and goals.
As Internal Auditors, it is imperative to have a deep understanding of business operations, KPIs and KRIs of the company you work for in order to help the board and management achieve the mission. IA will be treasured for their contribution when the work they do helps their organisation grow profitably toward their business goals, and guards the organisation from internal and external threats.
The job of a CAE entails them to work with management and process owners to identify areas in the audit universe that matter to them most, i.e. areas that enhance their performance (KPIs) and ease the threats (KRIs). They would then prioritise it amongst other processes and incorporate in the annual audit workplan.
The key findings and recommendations of these audits would be key to driving performance and reducing threats. We all know that contributions by IA are difficult to measure especially if they are intangible and take time to germinate but we can at least use the KPIs and KRIs as proxies in our self-performance evaluation.
When management sees that IA contributes to the KPIs and ease the KRIs, this would position IA as essential to a company’s value creation and success.