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ALRAQABA . ISSUE 15
Audit Vision
Governance:
In 2004, the Organization for Economic
Co-operation and Development (OECD)
defined governance as “a group of relations
and systems that govern the relationship
between the company’s administration, the
board of directors, the shareholders, and
the stakeholders.” This definition explains
that governance plays an essential role in
organizing the relations between all parties
and determining precisely the responsibilities
and obligations to enhance transparency
and elevate the institutions’ effectiveness and
efficiency and implement accountability.
The GCC SAIs’ Governance Control Manual
issued in 2021 described governance
as “a group of standards, regulations,
and procedures that achieve institutional
discipline in the management of the company,
institution, or public unit through distributing
the responsibilities and obligations among
the members of the board or the executive
management, taking into consideration
the importance of protecting the rights of
shareholders and other stakeholders.”
With respect to the governance laws and
regulations in Kuwaiti banks, the instructions
issued by the Central Bank of Kuwait in 2019
conceptually stated that corporate governance
is ”a group of systems, organizational
structures, and processes that aims to achieve
institutional discipline based on the international
standards and principles. The obligations and
responsibilities of the managing board and
executive management of the company are
defined through said systems. It is important
to take the protection of shareholders’ and
stakeholders’ rights into consideration.”
The previous literature indicates that
governance plays a vital role in enhancing
transparency and accountability and providing
more economic stability through striving
to reduce and control risks of all kinds.
Governance is necessary to fulfill the goals
of stakeholders, which in return would boost
their confidence in the economy and mitigate
corruption, therefore enhance the institutions’
roles in achieving their goals and elevating
societies.
To achieve the desired objectives from
governance, all institutions must verify the
efficiency of their applied governance systems
and check their effectiveness. In this context,
based on the international standards that
regulate internal audits, the role and capacity
of the internal audit departments and their
functions become more relevant to validate the
effectiveness of the governance systems within
the institutions.
The Role of Internal Audit in Assessing the
Governance Operations According to the
International Standards:
The International Professional Practices
Framework (IPPF), the conceptual framework
that organizes authoritative guidance
promulgated by The Institute of Internal Auditors
(IIA), indicates that among the main principles
of the internal audit profession is supporting
continuous improvement and development and
displaying quality. The IIA defined an internal
audit as “ an independent, objective assurance
and consulting activity designed to add value
and improve an organization’s operations. It
helps an organization accomplish its objectives
by bringing a systematic, disciplined approach
to evaluate and improve the effectiveness of
risk management, control, and governance
processes”.
The International Professional Practices
Framework specified that assurance services
