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The Speed-Quality Trade-Off in Audit - A Myth
The Speed-Quality Trade-Off in Audit - A Myth
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Beyond Size: The True Scope of Transfer Pricing
From Reports to Real Business Insight
UAE Corporate Tax Update | FTA Clarifies the Meaning of “Director” and “Officer”
Tax Transparency in the UAE: Why Data & Invoicing Are Now at the Core of Regulatory Oversight
FINTECH: Changing the way you think
Raju Menon, Chairman and Managing Partner - Kreston Menon

Mankind has always found solutions to the problems at hand or have invented ways to make their life easier. Be it from the primitive age when fire was invented or rather discovered, or the invention of the wheel which revolutionized the world.

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Changing the Landscape of Internal Audit
Kreston Menon
Background

The inadequacy of system to cater to business needs, issues regarding integrity and robustness of data generation (MIS), the absence of management strategy for monitoring risks, lack of control over the operational process, ambiguity over policy and procedures and issues so galore.

The above situations appear familiar? Indeed, these are common challenges that plague many businesses regionally and globally. Conventional belief laid emphasis on achieving business results and cash inflows, relegating the need to address pressing issues. Mounting challenges of varied nature posed by new economic order have made compelling reasons for businesses to introspect, to improve efficiencies, identify and manage risks, control leakages, rationalize costs etc. With matters of risks, control and governance gaining priority, many businesses are viewing internal audit as an important tool to achieve its dynamic objectives.

This article is an effort to shed light on the new approach used in internal audits that has led to increasing acceptance of internal audit activity as an investment that provides a return to an entity and not just reflect as a cost on the income statement.

Internal Audit
Internal Audit as a concept is exhaustive, but broadly refers to an activity carried out by independent professionals to assess whether an entity’s process and controls are adequately designed and are operating effectively, business risks are effectively identified and managed, whether resources are efficiently utilized etc. Based on the observations and findings, solutions and suggestions for improvements are provided in the form of a report to the team entrusted with governance.

The process areas covered under internal audit activity can be extensive but generally includes inter-alia, review of operational and financial functions of an entity (Operations, Procurement, Finance and Accounts, Human Resources, Information Technology etc.). Depending on the size of the entity, complexity of operations and the objectives to be achieved, approach to internal audit could assume the form of review, by covering different functions over a period. Alternatively, it may involve review of the design of all the functions at a time, backed by follow-up reviews. Dividing the scope into various functions, covered over a period, facilitates specialized focus on the department’s efficiency in achieving functional objectives as well as entity’s objectives.

Evolving Internal Audit Approach

There has been a paradigm shift in the expectations of businesses from the internal audit activity. Growing business competition, disruptions caused by advancement in technology and the desire and vision to be the industry leader by clients have brought to the fore, key questions regarding value creation, effectiveness and relevance of internal audit. This entailed an objective response by the internal audit fraternity, transforming the activity from a typical checklist-based conventional approach to a more sophisticated, comprehensive and risk-based audit.

Erstwhile Approach

Traditional internal audit approach involved an overall review of process and controls for compliance to established procedures from financial accounting/ treatment perspective. Also, the earlier approaches had greater focus on transactional accuracy and compliance with approved procedures.

This, to a large degree, ignored any significant impact of risks arising from operational, market and regulatory factors of the business. As a result, the traditional approach educed the internal audit to a mere fault-finding activity drawing lesser participation from the client management.

New Approach to Internal Audit

With the advent of the renowned concept of Enterprise Risk Management (ERM) Framework, a model developed by Committee of Sponsoring Organization of the Treadway Commission (COSO) for evaluating the risk management practice of an entity, coverage under internal audit has evolved into a more holistic and objective-based approach.

One of the components of ERM framework calls for risk assessment at all levels of the business organization setup including Entity Level, Division, Operating Unit and Function. Risk Assessment is a process of identifying and appropriately managing any adverse event (risk) that may impede or pose a challenge to an entity in achieving its goals or objectives (long term or short term).

The relevance and importance of timely risk assessment were greatly felt by corporates across the globe when market leaders faced an overnight catastrophe or near business closure event. Famous examples are Yahoo not assessing risk related to consumer preferences and eventually losing out on user experience and search engine business (market risk), BlackBerry losing out its relevance as they did not focus on bigger touchscreen displays (product technology obsolescence risk). More recent example is when Imagination Technologies Group suffered a major setback when Apple, its single largest customer (customer concentration risk), discontinued using their product. This concept of risk assessment was adopted by internal auditors to develop a risk-based audit approach to help businesses achieve operational, reporting and compliance objectives by becoming agile, transparent and resource efficient.

A risk-based audit approach requires a complete understanding of the entity’s business, industry, market segments, customers, suppliers, operations and expectations of the stakeholders. This understanding is transformed into objective statements at all organizational levels of the entity and risks (events having an adverse impact) impeding achievement of such objectives are identified, assessed for their risk levels and mitigation strategy is implemented.

Outcome/Benefits of Risk Based Audit Approach

Some of the major benefits arising from risk-based internal audit approach are listed below:



Conclusion

The above internal audit approach and outcomes/benefits derived in recent times, has made internal audit activity pivotal to corporates looking to unlock their potential and be prepared to face any adversity.

Further, the advancement in data analytics has led the internal auditors to employ advanced technologies to effectively orrelate the performance of the controls over risk, which an organization might encounter.

Kreston M E Consulting (formerly Morison (UAE) Consulting) has been providing internal audit accounting services Dubai including, systems review, business process review, drafting of policy and procedure manuals etc., for many years creating considerable value to its clients from varied industries.
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Business & Business Regulations-Update
Kreston Menon
The Freelancers permit launched by Dubai Internet City strives to give freelancers an affordable and secure option to work in Dubai, while also providing a feasible and attractive package of affordability and talent for businesses. The permit which was launched last year, helps freelancers to work in Dubai at a fee of AED 7,500 per year. With this permit, freelancers have the opportunity to freelance their skills and also have access to the TECOM Business Center along with a visa.

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Dubai Science Park
Marwan Abdulaziz, Janahi

A STATE OF THE ART GLOBAL BUSINESS HUB

About DSP

Founded in 2005, Dubai Science Park (DSP) is a vibrant, holistic, science-focused community, dedicated to supporting entrepreneurs, SMEs and MNEs. Since its inception, the community has grown to more than 350 companies, employing over 3,600 professionals in the sciences, energy and environmental sectors. Designed specifically for the needs of businesses and professionals who work in sciences, DSP fosters an ecosystem that supports scientific research, creativity and innovation. It strives to be Dubai’s most innovative and vibrant community for all segments of the science sector and a place where corporates and residents can work, live and flourish.

Its collaborative environment engages leaders in science, research, academia, and business to understand and set industry trends which tackle relevant and current societal and economic issues. With a prime location in Dubai, the science park provides businesses with easy access to key transportation networks.

Supporting Local Growth

Dubai Science Park aims to play a significant role in Dubai’s Vision 2021 by facilitating a more sustainable and self-sufficient future that maximises the use of local resources and talent. DSP will achieve this by supporting innovation in the sciences by helping companies utilise cutting-edge technology and information to foster growth and change in the areas of human science, plant science, material science, environmental science and energy science.

In 2018, DSP made significant progress towards delivering its mission, which seeks to grow the local science sector by enhancing the ease of doing business within its community. DSP welcomed new business partners, with key inaugurations including BASF, a German construction chemicals firm and the largest chemical producer in the world; Biocad, a leading Russian biotechnology company; and inui Health, an American digital tech company based in Silicon Valley. Most recently, Pharmax Pharmaceuticals, a GMP-licensed international manufacturer and distributor of medications, became the first pharmaceutical manufacturing company to join DSP’s growing community.

DSP nurtures entrepreneurs in the science fields through a fast and easy setup model that allows them to kick-start their projects and innovate. It also helps bridge the gap between academia and businesses, supporting career development within the field of science for students in the UAE. DSP raises awareness about the science industry within the society to increase its appeal and attractiveness among youth and talent.

Enhancing the Ease of Doing Business

DSP is the region’s first science focused community that caters to the pharmaceuticals, food and agriculture, diagnostics and analysis, as well as energy and environment sectors (among others). It is evolving as a hub for companies in the field of human science, plant science, material science, environmental science and energy science.

With nearly 90 per cent of pharmaceuticals in the UAE being imported, Dubai Science Park’s 360-degree approach to enhancing the ease of doing business aims to both attract key organisations from abroad looking to access business opportunities across the region as well as foster local enterprise growth. Ultimately, by developing the local market, DSP looks to create an environment that enables the emirate to reduce its dependency on imports.

The science park is designed specifically for the needs of businesses and professionals in the science sector. Its robust infrastructure combines office space, laboratories and warehousing facilities for businesses to flourish and features a state-of-the-art, plug and play, Laboratory Complex, that meets the highest international environmental standards.

DSP also hosts strategic networking events where business partners and stakeholders were given the unique opportunity to meet with experts and analysts from across the science sectors. This facilitates synergies within the community through connecting businesses operating in the science sector.

Positioning Dubai as a Hub

DSP is strengthening the position of Dubai as a destination for science companies, R&D, manufacturing and prototyping activities in a conducive environment that facilitates business growth.

DSP plays an integral role in actualising Dubai Industrial Strategy 2030 and developing the UAE’s innovation-led economy through the development of a thriving business hub in which scientific companies can innovate, thrive and grow.

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Reinventing business in the digital era
Saju Augustine

Digital technologies are leading to many of the wellentrenched businesses losing their market share rapidly  to new and nimble players emerging with innovative business models. The threat from new digital startups will continue to grow as digital technology keeps evolving.  Digital technologies also, however, provide the incumbent  businesses endless opportunity to expand the scope of  their business, come with newer operating models and  provides them to leverage existing platform or build a new  business platform for themselves, their clients and even their  competitors.

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VAT ENGINE
Surandar Jesrani, CEO & Managing Partner - MMJS Consulting

Data is the new oil of the world. The business inputs that can be derived from the data points and acting upon it makes or breaks a company in today’s world. It has become a reality that technology has taken over the mundane tasks that has had the brilliant human minds at stake. The impact of Artificial Intelligence on our lives both professionally and personally cannot be ignored or avoided.

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