Internal auditors now compulsory for companies: SIAS

Internal auditors now compulsory for companies: SIAS
By Ryan Huang | Posted: 30 March 2011 2204 hrs

SINGAPORE: The Securities Investors Association of Singapore (SIAS) is calling for tighter listing rules by making it compulsory for companies to have an internal auditor.

This is to ensure better governance in listed companies and protect shareholder interests.

Market watchers said the requirement for internal auditors should be made stricter, as currently companies can get away with it by citing various excuses such as cost constraints.

The call for a tougher stance follows a recent spate of S-chip companies requesting for trading suspensions to investigate their accounts.

SIAS said it wants the ruling to be enforced and not remain as a best practice recommendation as in the code of corporate governance.

"I would like this to be a listing requirement because if it is then you would find less and less of this happening. Company's internal controls need to be tightened up and one of the best ways to do this is to have an internal auditor, or internal audit department or function," said Mr David Gerald, president and CEO of SIAS.

Other observers believe the issue of internal auditing goes beyond making the role a strict requirement.

The Institute of Internal Auditors believes there is a need to better regulate the industry first.

It said there is currently no requirement for internal auditors to be certified and that has to change.

"The investors or shareholders will think that the checkbox has been ticked and the company has an internal audit function, and the internal auditor is doing what he or she has to do. but what if the internal auditor is not qualified, that will certainly give a false sense of assurance," said Mr Uantchern Loh, president of the Institute of Internal Auditors.

The Institute of Internal Auditors said it is also advocating other revisions to the Code of Corporate Governance.

This includes making it mandatory for companies to disclose if internal auditors have quit, just like in the case of senior level executives.

- CNA/cc

- wong chee tat :)