Executive Chairman of Kuala Lumpur Stock Exchange Dato' Mohd Azlan Hashim said increasing sophistication of business and corporate environment coupled with increasing demands of shareholders and investors has expanded the role of internal auditors to include internal control assurance, effective corporate governance and risk management.
"Functions of Internal Auditing is moving beyond compliance, towards a more consultative and role model approach. This is in line with the enhanced definition of internal auditing that the Institute of Internal Auditors has adopted, " he said when delivering a keynote address at the National Conference of Internal Auditing 'Corporate Excellence:Challenges and Opportunities' in Kuala Lumpur this morning.
Mohd Azlan said the challenge of achieving corporate excellence is in striking a balance between ensuring that business policies and strategies are established and pursued and the need for corporate accountability, transparency and legitimate internal controls.
Following recent events of corporate failures and scandals, many other jurisdictions have passed legislature and regulations with the primary objective of enhancing corporate integrity, corporate accountability and corporate governance which in turn is expected to help restore investor confidence.
"In Malaysia, the government and regulators have already implemented similar measures and objectives. The Malaysian Code of Corporate Governance in March 2000 had introduced principles and best practices to achieve the ideal governance framework.
"Additionally, KLSE via the new Listing Requirements launched in February last year, further sets standards of transparency and corporate disclosure for public listed companies," Mohd Azlan added.
Mohd Azlan said the internal auditing profession can add value and do itself a big service towards meeting the expectations of shareholders and investors.
To achieve this, the auditing profession must first take cognizance of several challenges:
- There must be a commitment and resolve within corporations to embrace new functions. Internal auditing functions would have to move away from only the watchdog role to a more strategic advisory role within the organisation;
- There is a need for cultural change at all levels within the organisation, to accept internal auditors as important business partners;
- Internal auditors need to fully understand the various risks confronting the organisation so that the risk management framework can be aligned with the organisation's business objectives effectively; and
- The role of internal audit should be clearly espoused to attract, develop and retain effective and high calibre professionals. Only when we have the best of personnel involved in this function will we have the best of deliverables and outputs.
