THE ROLE OF INTERNAL AUDIT IN CORPORATE GOVERNANCE
An effective and ethical corporate governance and internal audit function is not only vital for a commercial organisation to thrive, more importantly, it can safeguard the interest of various shareholders and stakeholders within the commercial organisation from the consequences and damages that come with corruption and fraudulent acts.
Internal audit involves examining, evaluation and monitoring internal control policies and procedures. The role of Internal auditors is to provide assurance to the management regarding the effectiveness of a company’s risk management and internal controls systems.
An excellent internal audit not only equip the board with a holistic view of governance structures and how well they are working within their organisation, more importantly, any sign of corrupt and/or fraudulent activity can be detected and mitigated at early stage, hence, safeguard the interest of the company and prevent the MACC from hammering down on the company.
Generally, companies are not required to carry internal audit arrangements, however, it is a part of good corporate governance practice to establish an internal audit department within the company or outsource this function to the professional firm. Internal audit is one of the features of large corporations after all.
The main responsibility of internal auditors include providing assurance regarding the following:
· Effectiveness of internal controls;
· Fair and reliability of the financial and key managerial information presented in the reports;
· Efficiency of the existing systems;
· Adherence of the implemented internal control procedures.
CONSEQUENCES OF POOR CORPORATE GOVERNANCE
One can never fully trust another person to be righteous all the time. Any commercial organisation that doesn’t practice good corporate governance is a natural breeding ground for corruption and fraudulent acts. When these illicit acts were exposed, reputation loss will be the least of their worries. With the MACC hammering down on the company, all personal employed by the company will likely be charge under the Section 17(A), MACC Act 2009, no matter if they were involved in these illicit acts or not. Negligence was their crime.
In Malaysia alone, many large organisations were defeated by corruption and fraudulent acts. Cases such as the Sabah Water Department, 1MDB, Port Klang Free Zone (PKFZ) and Immigration Department Scandal in 2018 were some of the more well-known cases.
For more information on good corporate governance and internal audit services, please contact us at +603-7960 9882, or send us an email at finance@novabizservices.com
Business hours is 8.30am – 4.00pm, Monday to Friday.
Office address is at Block A-31-05, Dataran 3 Two, No.2, Jalan 19/1, 46300 Petaling Jaya, Selangor.