At The Institute of Internal Auditors Malaysia, 2006 National Conference of Internal Auditing held in Kuala Lumpur on Sept 18. Securities Commission’s head, Datuk Zarinah Anwar offers the following insights:

·      many of the losses suffered by PN4 and PN17 companies were largely caused by mismanagement, fraud, and other unethical practices;

·      Corporate frauds could have been discovered in a more timely manner or perhaps even avoided, had internal auditors been more vigilant;

·      Internal auditors could have played a more proactive role in surfacing these misdeeds before the companies become financially distressed;

·      A study in the US showed that employee tips and internal audits uncovered more frauds within a company than external auditors;

·      Internal auditors could only effectively discharge their role as the ‘independent insider’ or the ‘in-house regulator’ if the company’s board and management recognized the value and strategic significance of the role of internal auditors;

·       Internal auditors can indeed make a difference in enhancing corporate governance practices within corporations that led the SC to introduce these provisions to protect whistleblowers when the Securities Industry Act was amended in 2004;

·      Good corporate governance was inexorably linked to good performance and increase in shareholder returns.

·      In Corporate governance, it is essential to look at performance beyond conformance; at substance over form.

·      Internal auditors must be particularly vigilant about form undermining substance.

·      Boards are often more focus on conformance, concentrating on box-ticking exercises whilst ignoring the spirit and substance of the laws, rules and codes.

·      “Underlining the SC’s regulatory approach of ‘no more regulation than necessary’ is our commitment to move towards more principles-based regulation. This however can only be achieved when there is a sufficient degree of market and self discipline, and less reliance on regulators to catch wrongdoers;

·      The CLSA-ACGA ‘Corporate Governance Watch 2005’ issued this year observed that enforcement was publicly demonstrated in Malaysia.

·      In the most recent World Bank report on ‘Doing Business 2006’, Malaysia was ranked number three in regulating the liability of directors and fifth in terms of investor protection.

·    The World Bank’s 2005 ‘Report on the Observance of Standard and Codes’ (ROSC) released recently observed that Malaysia was largely seen to be observing corporate governance practices and noted the strengthening of disclosure rules, the rights of shareholders, responsibilities of the board and whistleblower provisions.

(Source: The Edge Malaysia(18/9/06)