Internal audit guide for companies in Saudi Arabia

The internal audit guide for companies in Saudi Arabia has become very important, as it is an important tool for companies to ensure that their internal operations operate effectively and in the direction of achieving the set goals.

The CBD Accounting For Financial Consultantingoffice, the accredited financial office in Saudi Arabia, prepares the internal audit guide for companies in a professional manner

, thanks to the distinguished staff with extensive experience in preparing financial regulations and the accounting system for companies.

The concept of internal audit

Internal Audit: It is an independent evaluation activity within a specific organization that aims to review the accounting and financial operations and others, as a basis for serving the administration.

internal audit objectives ,Internal audit guide

The most important objectives of the internal audit are as follows:

Verifying the implementation of internal policies and procedures: where the institution’s compliance with its internal policies and procedures is examined, and then notes and recommendations are directed to improve performance and compliance with policies and procedures.
Internal Control Assessment: This is how the company’s internal control works, identifying points that need improvement and directing appropriate recommendations to strengthen internal control.
Verifying compliance with laws and regulations: This objective is to ensure that the company complies with local and international laws and regulations in force in the Kingdom of Saudi Arabia.
Improving efficiency and effectiveness: The internal audit team analyzes the company’s internal processes, procedures and practices, and makes appropriate recommendations to improve operations efficiency and effectiveness and reduce costs.
Improving risk management: This objective is represented in identifying and evaluating the risks facing the company, and identifying the necessary procedures to reduce these risks and manage them effectively.
Improving confidence in financial information: the quality of the financial and accounting information that is prepared is assessed.

The importance of internal auditing for companies

Recently, the importance of internal auditing has increased due to several factors:

The large size of projects and the complexity of their operations:

The emergence of joint-stock companies led to the large size of the projects and the separation of management from ownership,

which led to the inability of the project management to be familiar with all things in these projects, and therefore the matter necessitated the use of internal control systems.

Geographical dispersion of operations and the increasing scope of international operations:

With the large size of the projects, many branches were established in separate areas. This led to sending the internal auditor to review the work of these branches.

This auditor was called the “roving auditor” to follow up the employees’ commitment to administrative policies and suggest amendments.

The success of the itinerant auditor in performing these tasks had a significant impact on the emergence of the modern concept of internal auditing and its wide scope and increasing importance.

Expansion of management needs:

We find that the administration is the main customer of the internal audit department, and it determines the services it needs from the internal audit department, and the internal audit department must provide those needs.

Business concept of controlling the company

Control means that the board of directors is aware of the company’s affairs and is able to manage and direct it towards achieving the planned goals,

and overcoming the risks that may be exposed to as a result of the changing business environment, technological progress and competition.

The researchers believe that the internal audit provides senior management with analysis, evaluation, consultations and recommendations on the activities that have been examined,

and it can detect the fraud situation by determining the savings, the purpose, adding value and increasing the return of the facility. The internal audit now includes a wide scope of control and risk management.

Advantages of internal audit

The internal auditor, because of his presence all the time in the project and his contemporaneous problems, can touch all its aspects, activities, procedures and problems arising from it.
The internal audit is carried out in an organized manner and throughout the year instead of once a year in the case of an external auditor.
The external auditor mainly verifies the soundness of the financial position and the validity of the results, as he will not be able to give sufficient time to discover errors and manipulations, but resort to tests in his audit.

Therefore, the internal audit department conducts a complete review of all operations through independent examination within the project.

Therefore, it is considered an oversight to serve the administration, as it works to measure and evaluate the effectiveness of internal control.

Internal audit working papers

Internal audit working papers include:

Work schedule: It is a document that shows the activities and procedures to be reviewed by the internal auditor, and includes, for example: the dates of the audit, the topics concerned, and the names of the persons responsible for their implementation.
Checklist: It is a list containing all the documents and information needed by the internal auditor to carry out the audit.
Audit Forms: These are pre-designed forms that can be used to document and analyze audit findings and make recommendations.
Policies and Procedures: They are documents that specify the standards and procedures that must be followed by the company or organization, and contain responsibilities, procedures and deadlines for implementing the various operations.
Strategic plans and periodic reports: These documents provide the internal auditor with information about the company’s objectives, achievements and challenges it faces.
Previous internal reports: These are reports prepared by the internal audit in the past, and can be used to identify previous issues.

_ The internal control system.

_ Internal financial statements for companies in Saudi Arabia.

_ Learn about the most important accounting offices of 2023.

What is the corporate internal audit plan?

The internal audit plan is prepared based on a comprehensive analysis of all activities and processes within the company. The internal audit plan usually includes elements such as:

Risk identification: identifying potential risks that could affect the company, and analyzing their impact on the company’s operations.
Define areas to be audited: Define the departments and processes that are audited and evaluated.
Setting goals: Setting clear and specific goals for internal auditing and identifying key indicators of performance and quality that must be evaluated.
Determining the schedule: Determining the schedule for the internal audit, setting the start and end dates for the review, and determining the duration of each part of the review.
Developing an action plan: Developing an action plan that must be followed to address any irregularities or improve audited processes.
Results Documentation: Document findings related to each review, including positive and negative findings and feedback, and outline suggested actions to improve performance.

Internal Audit Manual PDF : .Click here

What are the internal audit standards?

The internal audit standards for companies in the Kingdom of Saudi Arabia include a set of standards and guidelines that have been identified by the Saudi Arabian Monetary Agency (Saudi Central Bank), as follows:

Compliance and verification: The internal auditor’s assessment of Saudi companies requires reviewing the company’s internal procedures and verifying their compliance with internal standards and applicable legislation.
Effectiveness and efficiency: The internal auditor must evaluate the effectiveness and efficiency of the company’s internal system and make recommendations for improvement if necessary.
Confidentiality and protection: The internal auditor must ensure that the information collected during the audit is kept strictly confidential and protected in the necessary ways.
Independence and professional competence: The internal auditor must be independent and qualified to carry out their duties efficiently and independently.
Reporting: The internal auditor must adequately document and verify what has been evaluated and submit reports to the company’s board of directors and executive management of the company.

These standards and guidelines are followed by internal auditors in Saudi companies to ensure the integrity and reliability of the company’s financial and operational information

and to ensure that the set objectives are achieved.

What are the types of review?

The types of internal audits that are implemented in companies differ according to the size and type of company, the nature of its business and the potential risks. Among these types:

Review of internal operations: It is a review of the company’s internal operations and procedures to ensure that they are applied correctly and effectively, including ensuring internal control and their compliance with applicable standards and regulations.
Risk review: Risk review includes assessing the current and potential risks faced by the company, assessing their impact on the business, and making recommendations to mitigate these risks.
Compliance audit: It aims to assess the company’s compliance with applicable standards and regulations, including bylaws, government laws, and professional standards.
Performance review: It is a review of the company’s performance and ensuring that objectives and financial, administrative and operational performance are achieved in accordance with applicable standards.
Financial review: It aims to ensure the validity of the company’s financial and accounting statements and their compliance with accounting standards.
In conclusion, this article introduces the concept of internal audit for companies in the Kingdom of Saudi Arabia, the internal audit guide, its objectives, importance, the internal audit plan
and internal audit working papers, in addition to identifying internal audit standards.

We at the CBD Accounting For Financial Consultanting office are working to provide the service of preparing an internal audit guide and providing the necessary accounting advice to reach our clients for success in various projects and companies.