Overcoming Fundamental Challenges of Compliance with King IV
Perception is arguably the biggest obstacle to compliance, with many boards viewing King IV compliance as a cost to company instead of embracing it as an ethos. Viewing it this way risks waiving from what should be done to lower costs. King IV’s “apply and explain” exists to curb this behaviour, and what better way to implement — and assess — “apply and explain” adherence than with internal auditing?
Internal Audit’s Role in King IV Compliance
Internal audits are crucial in assessing and enhancing an organisation’s governance, risk management, and internal control processes. By improving the efficacy of these areas, internal audits, in turn, add significant value to King IV compliance.
Enhanced Risk Management
King IV underlines the importance of effective risk management practices. Internal auditors assist with identifying key risk factors, which enables them to address current concerns and anticipate future ones. Companies can also scrutinise their processes and controls to improve efficiency. An internal audit provides management with insights to assist decision-making to thwart future risks.
All in all, internal audits help to establish a solid risk management framework aligned with King IV principles.
Evaluating Compliance
- Internal audits assist with adherence to King IV in several ways, namely:
- Developing and approving short, medium and long-term strategies.
- Confirming performance measures and targets.
- Providing informative reports to inform stakeholders of the organisation’s performance.
- Ensuring assurance services are conducive to an effective control environment.
- Rating and monitoring statutory compliance across all levels of the entity.
The organisation can identify and rectify deficiencies by conducting regular, unbiased assessments.
Promoting Ethical Culture
In helping organisations maintain good governance, internal audits promote an ethical work culture. The inherent nature of the audit process models ethical behaviour. Reports often include ethical misconduct—as such, auditors must act with the utmost integrity and courageously reveal unethical practices. As internal audits assess the effectiveness of processes and actions, auditors are uniquely positioned to advise on these matters and, therefore, ensure that they align with the organisation’s policies and ethics.
Independent and Objective Assessments Support King IV Compliance
Through independent and objective assessments, internal audits foster transparency and accountability within an organisation and, therefore, are a critical component in King IV compliance, owing why regular internal audits are necessary to maintain good governance and enhance stakeholder confidence.
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