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'Seek assurance from internal audit function before venturing out'

It is imperative that the board and senior management seek an assurance from the internal audit function before an organisation ventures into new or higher risk areas of growth.

Bank Negara Malaysia governor Muhammad Ibrahim said the audit committee should identify opportunities where the internal audit function can add value, through consultations and advice on business process improvements.

"The input from internal audit should move beyond compliance to strategic auditing and to provide value-added recommendations for the betterment of the organisation," he said.

Muhammad said this when addressing the fifth Petronas Board Audit Committee Forum in Kuala Lumpur today.

He said the internal audit function, however, must be supported by a strong quality assurance process.

"This becomes even more important as companies grow in scale, venture into new lines of business and became more complex," he said.

Muhammad said internal auditors must be equipped with the requisite skills such that they would be able to leverage on their expertise and experience to make sound judgement and challenge the norm.

Close engagement

He said there must have close engagement between the internal and external auditors on key risks and systemic issues, and in strengthening the overall assurance process.

Furthermore, he said, the internal audit function should leverage on technology as a key enabler to improve audit quality and audit effectiveness.

Innovation in audit techniques, he said, should be promoted with greater usage of data analytic tools for better risk profiling and sampling.

Muhammad said the audit coverage and scope should not be confined to compliance or risk-based parameters.

"The so-called ability to ‘connect the dots’ about the implications of the audit findings across the organisation is an important starting point to identify new and emerging risks," he said.

The internal auditors should be constantly challenged to think beyond the scope of the audit framework and focus on the broader picture, he said.

- Bernama

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