Saudi Central Bank introduces new principles for internal auditing and compliance

SAMA’s new compliance and internal auditing principles came into force on 2 April and consist of 13 principles that range from the duty and responsibilities of the board of directors, audit committees and executive management toward internal audits to documentation and reports.

Marie Chowdhry, an expert in regulation at Pinsent Masons, said: “These principles aim to enhance internal control and improving the company's operations and business.”

“The principles set the minimum requirements which SAMA would expect to enable the internal audit department to perform its tasks efficiently and optimally,” she said. “These principles appear to align SAMA’s internal audit standards with international best practice and global internal audit standards.”

The new audit principles cover several critical areas. They outline the duties and responsibilities of the board of directors in overseeing the internal audit function. They also cover the duties of the audit committee, which include reviewing and approving the internal audit plan, monitoring the implementation of audit recommendations, and ensuring that the internal audit function aligns with the company's strategic objectives.

Key requirements of the internal audit department, including structure, independence and the relevant qualifications required are also covered; as are the audit policies and plans which must be developed by the internal auditor, including in relation to the scope, objectives, and methodology of internal audits. The principles also cover the importance of timely and accurate reporting of audit findings to the board and audit committee. Proper documentation of audit processes and results is also mandated.

The principles promote a systematic and disciplined approach to internal auditing, which will help companies identify and mitigate risks more effectively.

Lana Akkad, an expert in financial regulation, said: “The principles will contribute to improved operational efficiency and companies will be better equipped to achieve their goals and respond to challenges.”

“The principles will also reinforce the importance of compliance with regulatory requirements and internal policies, which will foster a culture of accountability and ethical conduct within SAMA-regulated entities,” she said.

“We recommend that all SAMA-regulated entities have their internal audit and compliance frameworks assessed by an independent expert in order to ensure compliance with the new SAMA principles.”