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Michael Green, Head of Business Risk Services for Ernst & Young Middle East, explains:
"These global trends are being replicated in the Middle East, as there is an increased recognition that effective internal controls have a positive impact on both business performance and Corporate Governance. Many companies in the Middle East are voluntarily seeking to improve their governance & control frameworks to be in line with leading edge practices adopted by large global corporations."
With international investors increasingly demanding more transparency and 'no surprises', an interesting point to note from the survey is that 50% of respondents cite 'positive influence over investor confidence' as a key business driver for future investments in internal control. The other key drivers for future investments were also business benefit related, focusing mainly on enhancements to processes and the underlying control structure (89%) and better understanding of major risk areas (86%).
One notable absence for companies in the survey is the existence of a formal fraud prevention program - 68% do not have one in place, despite over one-third of respondents rating this as important or very important to have in place.
Ali Al-Shabibi, Partner, Business Risk Services for Ernst & Young Dubai, adds, "CEOs are beginning to realize the limitations of financial statement audits and are beginning to demand assurance on their broader internal control framework. They are looking to their CFOs and Heads of Internal Audit directors to provide them with a process for such assurance."
Ali concludes, "CEOs need to ask whether they have an agenda for internal control within their organization; they need to be proactive in their approach to better governance and controls. This isn't about waiting for regulatory requirements to be applied in the Middle East, its about good business sense."
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Medilyn Manibo, Assistant News Editor
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