Consistent and comparable financial information is the crux of accounting for businesses. Accounting standards have always posed challenges to cross-border investments and to companies that wish to expand their services overseas. “ One global financial reporting network”, that promotes harmonization of accounting standards can help investors in formulating better investment decisions on time. This is made possible with the International Financial Reporting Standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB).

For understanding the requirement of a common global language for business affairs, numerous countries have decided to embrace IFRS, and Kingdom of Saudi Arabia is no exception. The Saudi Organization for Certified Public Accountants (SOCPA) has adopted and transitioned to the new standard, that requires all companies except the one in the banking and insurance sectors to follow  IFRS. Additional disclosure requirements were included in certain standards, to reflect sharia or local law. Considered as a significant milestone in the country’s economy, the implementation of IFRS will augment the quality of reporting along with boosting foreign direct investment.

Unlike Generally Accepted Accounting Principles (GAAP), which was widely used in Kingdom of  Saudi Arabia, IFRS gives a bigger picture of the financial reporting standards and promises greater transparency and clarity.

Key Difference between Saudi GAAP and IFRS

With the implementation of IFRS, it’s not just the accounting sector that is going to witness massive change. It would most likely impact various other areas of an organization, ranging from taxation and marketing to sales and human resources. As such, there are many companies that are not confident about the transition, as they are scared about the expected changes in financial statements.

Proper planning and preparation and the help of an advisory firm that can provide you advice on GAP analysis, transition and reporting processes of the standards, eases the process of IFRS implementation.

A successful enterprise is the one that is on a constant lookout for improvements in its operations, thus adding value to the firm. While majority of the companies strive for excellence, there are numerous others that remain stagnant for year or decades. What they lack is a systematic, disciplined approach, that can be made possible with an effectual internal audit team.

Internal auditing is an independent, objective assurance and consulting activity designed to add value and enhance an organization’s operations. It helps in evaluating and improving the effectiveness of risk management, control and governance processes.

Internal auditing sector has witnessed a massive growth in the last few years – the function has evolved from being a department responsible for conventional audits to a strategic partner that acts as the backbone of a business. Today, internal auditing is no less than a powerful tool that has the potential to shape the future of an organization.

Responsibilities of an internal auditor

• Offer insight and advice
• Evaluate risks
• Assess controls
• Ensure accuracy
• Improve operations
• Promote ethics
• Monitor compliance
• Review processes and procedures
• Assure safeguards
• Investigate fraud
• Communicate results

Maintaining an in-house internal audit team may not be a feasible option for majority of the companies. Attracting and retaining highly skilled internal auditors is a huge challenge in today’s competitive era. There are also possibilities of bias and internal conflicts that could arise in the long term. When you can get truly professional expert service at relatively lower costs, why would you say no to an outsourcing firm?

Advantages of Outsourcing Internal Audit

• Reduces cost and time
  The cost of in-house Internal Audit employees is usually higher than what an outsourcing company would charge. Outsourcing helps you lower cost, along with giving employees ample time to focus on the core activities of their business.
• Unbiased Appraisal

  An external party can better analyse the performance of a company, compared to employees within the firm. There are nil chances for conflict, ego and competition, and the results are, novel ideas & proposals for enhanced performance and alleviation of risks & control.

• Imparting industry best practice

  Independent consultants are better aware of issues, be it industry specific or general. Having worked in the field for years for numerous companies, they have an upper hand in analyzing and solving issues.

• Functional Diversity
  A good team of outsourced internal auditors come with various skill sets. The team will have domain experts in Finance, Operations, Human Resources, IT and even Strategy. Such a diverse portfolio of skills is usually rare to find in a relatively smaller internal team.
• Assures independence

  An internal audit team within the organization might feel less empowered, as the possibility of management brushing off their views are pretty high. Whereas, outsourcing opens the door to independence.

If you are looking for a fair and unbiased approach that lets you accomplish your business objectives, then think no further – outsourcing your internal audit / compliance function is what will serve you best.