Page 27 - ENGLISH MARCH final 2018

TO COMMENT on the article,
Audit Committee EMAIL the author at aabunabaa@yahoo.com

Common mistakes in this context include: action against those who do not Sixth: Other mistakes:
respond to internal audit reports
1) Lack of awareness among the members despite ongoing follow-ups from 1) Leaving the process of request for
of the committee that they are internal audit department; which may proposals and fees negotiation in
responsible for the effectiveness and lead to frustration among internal relation to outsourcing some or whole
efficiency of internal audit activity. audit team and weakening the role of of internal audit activities to executive
2) Lack of assuring that the internal audit internal audit activity in organization. management .
plans are in line with organization Fourth: Mistakes in the relationship of
strategies and covering the most audit committee with external auditor: 2) Failure to follow up the latest laws
important risks encountered, and and legislations issued concerning
lack of assuring effective coordination Common mistakes in the relationship of organization activities.
between the internal audit activities and audit committee with external auditor: 3) Failure to follow up and carry out
the rest of internal control departments
within organization (risk management, 1) Failure to have a meeting with periodic review on effectiveness and
compliance management, security independent auditor, periodically, to efficiency of managing the most
management and safety management, discuss a proposed work plan, and important risks facing organization,
etc.). ensure his/her independence and whether strategic, operational, financial
objectivity. Or not meeting with him/ or compliance.
3) Lack of knowledge about the her unless there is a representative of
methodology followed by the internal executive management in presence, 4) Lack of focus on information security
audit activity and not asking the and not auditing financial statements and IT risks.
director of internal audit department in critically. We rarely find an audit
a critical manner about achievements of committee that seriously discusses 5) Failure to adopt any mechanism that
internal audit activity. auditor’s opinion, work followed allows all organization employees to
4) Failure to promote importance of in covering some important audit provide their comments secretly about
having an independent audit activity in elements such as investments, debt any violation of regulations, and not
organization, for both board of directors allocations and performing some to verify effectiveness of implementing
important tests. It is worthwhile noting
and executive management. such mechanism, by conducting
here that the independence of auditor an independent investigation
5) Non-approval of a charter, policies may be affected if he/she has submitted commensurate with the size of error or
and procedures of internal audit consulting work to organization and/or override and not adopting appropriate
department. if executive management has solicited follow-up procedures.
offers and negotiated fees with the
6) Failure to have a meeting with director auditors.
of internal audit department without 6) The committee never exploits its
having a representative of executive 2) Not asking external auditor to submit authority to review organization records
management. to management (Management Letter and documents, to ask for clarification
Points) and study his/her notes about or statement from members of board or
7) Failure to look at and approve a strategic corporation financial statements and members of executive management, and
plan (not annual plan) of internal audit on the adequacy of internal control to ask board to call general assembly
activity. systems and on follow up actions. of shareholders for a meeting if board
8) Allow executive management to 3) Lack of knowledge about the obstructs its duty.
intervene in appointing the director requirements of adopting international
of internal audit, determining his standards, and with possible The role of audit committees is of
remuneration, not to review and weaknesses and manipulation and continuous development and their focus on
approve annual budget of internal leaving the matter entirely to executive old means considering the developments in
audit activity and leave it to executive management and the auditor. the risk environment and the enormous size
management and not to ask the of task on shoulder of board of directors is
director of internal audit department Fifth: Mistakes in committee meetings: no longer sufficient. Therefore, they should
frankly about his personal assessment focus more on organizational changes that
of the level of his independence from Some common mistakes in relation to may affect overall control, risk management
executive management and its level of committee meetings include low number processes, compliance with regulations and
cooperation with him. of meetings, , short duration, poor pre-
preparation by its members, failure to laws, and on helping the board to play its
9) Failure to carry out a periodic read internal audit reports presented to supervisory and control role over executive
assessment for internal audit activity by them, lack of documenting all the matters management performance, thereby
the committee (at least once a year) and that were discussed in committee minutes supporting independence of external
by an external party (at least once 3-5 of meetings, but, documenting only the auditor and increasing effectiveness of
years). decisions and recommendations, and delays internal audit activity and internal control
10) Rely, mainly, on director of internal in preparing the minutes or approving systems.
audit to perform duties and it. In addition, it is wrong to believe that
documenting some sensitive issues may
responsibilities of the committee.
harm organization reputation, and also not Ala’ Abdelaziz Abu Naba’a, CPA, CIA,
11) Weak interaction of the committee reporting, periodically, on committee work CRMA, CICP, MACC, Head of Audit and Corpo-
with the results of internal audit to board of directors or general assembly of rate Excellence at IFA Group of Companies (In-
reports, or failure to take appropriate shareholders. ternational Financial Advisors)

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