Internal Auditing in Dubai, UAE
From January 2018, the Abu Dhabi National Oil Company (ADNOC) has launched an In country Value program (ICV) with a view to diversify the UAE’s economy by localizing more goods and services, create more employment opportunities for the UAE nationals in the private sector and the localization of important functionalities in the field of oil and gas.
After the implementation of ICV program, ADNOC’s suppliers and service providers are required to show a significant increase in the ICV score by declaring their ICV achievements certificate with respect to the previous financial year. ICV score is now become an integral part of ADNOC tendering process as awarding criteria is now based on the lowest price and high ICV score.
All the ADNOC suppliers are now required to contact an ADCOC certification body for ICV certificate and submit the supplier’s submission template. In the UAE, the ICV certificate can only be obtained from an ICV approved auditor/ audit firm. The ICV auditor/ audit firm will only issue the ICV certificate on the basis of the audit report of an entity issued by an approved external auditor or audit firm from the government of UAE.
ADNOC program is the continuation of 2030 growth strategy which is defined as “creating more profitable and valuable business along with persistent supply of oil and gas”.
Purpose of an internal audit function
One of the major objectives of internal audit is to make sure the management has prepared the financial statements with honesty and a fair view. Internal auditors are hired by the BOD to circumvent a qualified opinion (expressed by external auditor) due to fraud or errors committed by the management. The internal auditors are also required to cooperate with the external auditors during the annual audit, if reasonably required.
Internal auditors independently provide clients i.e. the management and the BOD with assistance regarding the business performance. It assesses the progress of various departments of the company and how well they are coping up with the business standards. In case of any inefficiency, the internal auditor is required to advise the management on how to eliminate such sort of wastefulness.
Internal controls of the company define the integrity and honesty of a company. It ensures whether the management has promoted an environment of integrity and truthfulness, accountability for fraud or errors and whether mechanisms, rules and accounting procedures are performed truthfully.
It is the job of the internal auditor to maintain effective controls to avoid any potential fraudulent activities as well as review all the controls in terms of costs and benefits. The internal auditor must review the consistency and honesty of financial information and the means of identifying, measuring, classifying and reporting such information.
The internal auditor must also do stock count and check up for any considerable damages as well as verify the existence of assets reported on the financial statements.