IIA Singapore and RSM jointly organised a roundtable to discuss “What is an effective and adequately resourced internal audit function?” on 21 November 2018. The event saw the participation of 12 internal audit leaders representing listed companies, public sector, multinationals, Board member and IIA Singapore. These companies included Barclays, Boustead, CDL, DBS Bank, Defence Science and Technology Agency, Fraser & Neave Group, Lee & Lee, Mandai Park Development, Marina Bay Sands, SGX and SIA.
With the recent revisions in the Singapore Code of Corporate Governance (CCG), Principle 13 on Internal Audit in the 2012 version of the CCG has been shifted to the SGX Listing Rules, which will become effective on 1 January 2019. The proposed amendment to the Listing Rules states that “An issuer must establish and maintain on an ongoing basis, an effective internal audit function that is adequately resourced and independent of the activities it audits.” This means that companies listed on the SGX are no longer afforded the option to ‘comply or explain’ why they do not have or need an internal audit function; it will be mandatory for them to establish the function. This change underscores the importance of internal audit in promoting good governance, risk management and internal controls.
Facilitated by Mr Tay Woon Teck, Managing Director of Risk Advisory, RSM, a robust discussion took place on questions ranging from “What is an effective internal audit function and how should effectiveness be defined?”, “What is the expectations of the internal audit stakeholders such as the Board, Audit Committee, management and regulator?” to “How to benchmark adequate or appropriate resource?” and “What does the International Professional Practices Framework of IIA offer in terms of guidance on the resourcing, independence and effectiveness of the internal audit function?”
To round up the discussion, Ms Tan Boon Yen, President of IIA Singapore shared the 10 Core Principles for the Professional Practice of Internal Auditing, which, taken as a whole, articulate the essence of internal audit effectiveness. The 10 principles are:
- Demonstrates integrity
- Demonstrates competence and due professional care
- Is objective and free from undue influence (independent)
- Aligns with the strategies, objectives, and risks of the organisation
- Is appropriately positioned and adequately resourced
- Demonstrates quality and continuous improvement
- Communicates effectively
- Provides risk-based assurance
- Is insightful, proactive, and future-focused
- Promotes organisational improvement
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