The performance assessment of internal audit function is an internal control, which provides the Board of Directors in listed and licensed companies with assurance about completeness of the internal control systems, the annual internal control review reports developed by the independent auditor, integrity of implementation of internal audit activities, integrity of internal audit reports and the implementation of its recommendations.
Is the performance assessment of internal audit function a mandate by any regulatory authority?
The Executive Regulations of Law No. 7 of 2010 concerning the Establishment of Capital Markets Authority and Regulation of Securities Activity set forth in Module 15 – Corporate Governance as follows:
|Article 6-9||An independent audit firm shall be engaged to evaluate and review the internal control systems and prepare a report in this regard (Internal Control Report), which shall be submitted to CMA on annual basis. Furthermore, another audit firm shall review and assess the performance of internal audit department/office/ unit periodically every three years; provided that a copy of such report shall be submitted to the internal audit committee and the Board of Directors.|
Which companies are required to have the performance assessment of internal audit function conducted?
The companies required to have the assurance report on the performance assessment of internal audit function are the companies listed on Boursa Kuwait and the companies licensed by Capital Markets Authority.
What is the effective date of Article 6-9 of Module 15, based on which the three-year period is computed?
Pursuant to Appendix (3) Transitional Provisions to Decision No. 72 of 2015 dated 9 November 2015 regarding issuance of Executive Regulations of Law No. 7 of 2010, Article 6-9 of Module 15 of the said Executive Regulations shall come into effect from 30 June 2016. Accordingly, the listed and licensed companies shall commence the assessment of internal audit function’s performance effective from 30 June 2019.
What is the added value to business entities from Performance Assessment of Internal Audit Function?
- Comply with laws, regulations, resolutions and instructions issued by Capital Markets Authority;
- Identify efficiency of internal audit department/ office/ unit performance in carrying out their roles and responsibilities;
- Enhance the performance efficiency of internal audit department/ office/ unit and the business entity as a whole through identifying strengths and weaknesses, and defining performance improvement opportunities.
What are the services offered by Baker Tilly?
Assurance Report on Performance Assessment of Internal Audit Function Report
Prepare report every three years on the review and assessment of internal audit function’s performance for KSE-listed companies and companies licensed by Capital Markets Authority.
(Reference: Capital Markets Authority, Decision No. 72 of 2015 regarding issuance of Executive Regulations of Law No. 7 of 2010 concerning the Establishment of Capital Markets Authority and Regulation of Securities Business, as amended – Book XV: Corporate Governance, Chapter 6, Article 6.9)