Internal audit works as an insurance against corporate failures

Published Fri, Jul 9, 2021 · 05:50 AM

RECENT developments in the local market involving Sakae Holdings and ecoWise Holdings have illustrated just how important it is that companies have strong internal controls in place, as well as a robust internal audit function that can detect gaps and weaknesses which could compromise a company's financial position.

In addition to ensuring strong internal audit, companies serious about enhancing their governance should consider adding a relatively new function within their senior ranks - a chief integrity officer whose job would be to spearhead integrity programmes and ensure an ethical culture is institutionalised within the company.

In Sakae's case, external auditor Deloitte & Touche had said last year it could not obtain appropriate audit evidence and certain information related to the loss of control of a subsidiary. Deloitte also did not have enough evidence to verify the existence and recoverability of gross receivables amounting to S$5.4 million due from this subsidiary, and another $1.3 million…