In Internal control and the transformation of entities, the three professional bodies joined forces to poll some 2,000 of their global members to better understand what lies ahead for internal control. This core part of business operations management achieves important objectives, improves performance, and builds reputation, especially in disruptive and uncertain times as entities continue to transform using data and technology as drivers.
The findings show that the continued effects of the pandemic, turbulent economic climate, evolving regulation, and increasing adoption of data and technology are all presenting organisations with unique challenges for their internal control activities.
Among Malaysian respondents, 62% highlighted the lack of appropriately skilled staff as a significant challenge, compared to 50% of global respondents.
On other touchpoints, perspectives were similar to global results, as 42% said technological advances are compromising existing internal controls and 37% said a lack of executive emphasis on internal controls was also impacting the management of internal control, compared to global findings at 41% and 32% respectively.
Respondents were also asked about the purpose of internal control in an entity, and both Malaysian and global respondents agreed that minimising risks (87% locally, 88% globally) and preventing fraud (86% locally, 84% globally) are its top two functions.
The poll also shows that most respondents – 76% locally, 80% globally – say they agree or strongly agree that they need to apply their internal control framework to non-financial and ESG reporting.
Helen Brand, chief executive of ACCA, says: ‘Internal control forms a core part of the activities of accountancy, finance and internal audit professionals, assisting them to ensure that entities operate effectively and efficiently. Yet the business model is changing for many because of various and interconnected external pressures. Given this ongoing turbulence, it’s therefore essential that organisations recruit and retain the skilled people who can ensure that internal controls are agile and future-ready to support business transformation and growth.’
Jeff Thomson, CMA, CSCA, CAE, President and CEO of IMA, adds: ‘As we say in the foreword to our report, internal control goes beyond statutory compliance requirements. It helps entities build trust, confidence, and a positive reputation in achieving strategic business outcomes. All this is increasingly vital now and in the future, as we do not see turbulence or volatility decreasing.’
Anthony J. Pugliese, IIA President and Chief Executive Officer, Internal Audit Foundation Board of Trustees, adds: ‘Internal control demands appropriate prioritization by management and a combination of people, processes, technology, and data – all underpinned by an unwavering commitment to trust and ethics. The route to this is through professional qualifications and continuing professional development, which our three organizations commit to delivering now and in the future.’
The report also makes numerous recommendations and actions to improve internal control listed under headlines about the main drivers of change – such as strategy, transformation, people, processes, technology, and data.
Clive Webb, a co-author of the report and head of business insights at ACCA, concludes: ‘Our recommendations will help accountants, finance professionals, and internal auditors navigate the way ahead as entities continuously evolve and transform. Our collective professions’ role in this change is essential, and we have every faith that their skills, knowledge, and dedication will ensure the future strength and integrity of internal control processes in an increasingly challenging world.’