ALRAQABA . ISSUE 15
65
Audit Vision
The Role of Internal
Audit in Enhancing
the Governance of
Institutions
Since the outset of the third millennium, countries around the world have witnessed several
economic shocks and crises. The lack of compliance with the organizing laws, principles, and
accounting standards by companies has led to the collapse of many major corporates along with
heavy economic losses.
In 2001, Enron, one of the biggest and most significant energy companies in the United States,
collapsed. The subprime mortgage crisis then followed in 2008 primarily attributable to the deficiency
in following up on the implementation of relevant rules and regulations of institutional management.
As a result, several financial and capital markets crashed, the unemployment rate went up due to
bankruptcy, and many banks and large firms collapsed.
The recurrences of these crises indicated that there is a lack of compliance by companies and
cooperate managers with management laws and regulations that preserve the rights of all
stakeholders such as suppliers, investors, and creditors, etc. Another reason causing the crises
is the weakness in assessing the effectiveness of the institutional governance and due diligence
needed to prevent conflict of interests and enhance transparency which is necessary to prevent
collapsing and mitigate the impact of potential economic crises.
As a result of the critical damages faced by the stakeholders, the need to assess the effectiveness
of the applied governance systems in companies and institutions has emerged. The internal audit
department’s role in verifying and auditing the efficiency and effectiveness of said systems and
enhancing their quality and operations must be highlighted.
Ali Abbas Hayati
Auditor, Internal Audit Department
