Internal auditors key in mitigating company threats
Isaac Pinielo | Thursday November 13, 2014 11:09
During the opening of a three-day Institute of Internal Auditors Botswana (IIAB) 4th Annual National Conference in Gaborone yesterday, auditors indicated that an internal audit’s role was important in managing large programme risks. An internal audit is defined as the examination, monitoring and analysis of activities related to a company’s operation, including its business structure, employee behaviour and information systems.
It is designed to review what a company is doing in order to identify potential threats to the organisation, and to make suggestions for mitigating the risk associated with those threats in order to minimise costs.
Professor Mervyn Eldred King, chairman of the King Committee on Corporate Governance in South Africa, said internal audit was critical in modern governance. He noted that internal audit provided independent assurance that an organisation’s risk management, governance and internal control processes are operating effectively.
“Internal audit is critical if one has regard to the fact that it safeguards investors’ interests, keeps the business on track, supports the board of directors in regard to the veracity and quality of information in their packs and informs the audit committee more than the external auditor,” he said.
King also noted that the quality of internal audit today has increased enormously. He added that CAE needed networking, boardroom presence, intellect and courage in a world of integrated thinking and the integrated report.
He said IIAB had issued a document showing the emerging role of the internal auditing profession in regard to governance and risk, aligning it with governance and risks contained in the content elements of the integrated report framework of the International Integrated Reporting Council (IIRC).
“Organisations would need to provide assurance regarding the information from which material information is extracted and put in the integrated report,” he said.
King further enthused the the role of internal audit would expand from its primacy assurance role, to that of a critical advisory role in integrated thinking.
Shirley Machaba, Southern Africa Risk Assurance Leader at PricewaterhouseCoopers revealed that this year’s State of the Profession survey findings showed that significant differences of opinion exist between stakeholders and CAEs on the nature of what is expected of an internal audit.
She said on average, only 49 percent of senior management and 64 percent of board members believed internal auditing was performing well at delivering on expectations. On the other hand, 55 percent of senior management were not convinced that internal audit added any significant value.