Professional Documents
Culture Documents
Internal control review assumes greater importance in the light of current economic
downturn. Monitoring and assessment of internal controls across various functions is
performed through continuous evaluations to ensure whether the implemented internal
control system is effective as intended by the Board of Directors. The assessment
facilitates identification of internal control deficiencies for further corrective actions.
1. What is Internal Control Review – ICR and how different it is to Internal Audit?
ICR is an overall assessment of the internal control system and its adequacy of each
business area in an organization to address the relevant risks. Through control review,
an organization's resources are directed, monitored, and measured in an effective
manner. It plays an important role in protecting the organization's tangible and intangible
resources.
Whereas, Internal audit as defined by the Institute of Internal Auditors is "an activity that
provides independent, objective assurance and consulting activity designed to add
value and improve an organization’s operations. It helps an organization accomplish its
objectives by bringing a systematic, disciplined approach to evaluate and improve the
effectiveness of risk management, control, and governance processes".
As per the COSO model, the components of the internal control system are:
Control Environment: This sets the tone for the organization, influencing the
control consciousness of its people. It is the foundation for all other components
of internal control.
Risk Assessment: The identification and analysis of relevant risks to the
achievement of objectives, forming a basis for how the risks should be managed.
Control Activities: The policies and procedures that help ensure management
directives are carried out.
Information & Communication: Systems or processes that support the
identification, capture, and exchange of information in a form and time frame that
enables people to carry out their responsibilities.
Reporting & Monitoring: Processes used to identify, monitor and report the
quality of internal control performance or deficiencies to appropriate levels.
As per the various circulars issued by Central Bank of Kuwait (CBK) from time to time,
banking and investment companies are mandated to comply with ICR regulations. The
ICR auditors are to provide their opinions and remarks on whether the regulations and
internal control systems are sufficient enough in quality and quantity to manage the
risks that the company faces in its day-to-day business.
As has been the practice, all banks have to submit ICR reports by June 30 every year to
CBK. However, this is notified year on year.