How Does Internal Audit Support Compliance With Saudi Regulations and Standards

 

Internal Audit Services

In the rapidly evolving economic and regulatory landscape of Saudi Arabia, organisations across all sectors must strengthen governance structures to remain competitive and compliant. One critical component that ensures organisations meet regulatory expectations effectively is internal audit. For businesses working with a Financial consultancy Firm or engaging a consultant internal audit, the value of a strong internal audit function goes far beyond traditional financial checks. This article explores how internal audit supports compliance with Saudi regulations and standards, using the latest 2025 to 2026 insights and quantitative data to inform a strategic approach.

Understanding Internal Audit and Its Role in Compliance

Internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. Beyond assessing financial accuracy, internal audit evaluates risk management, control environments, and governance processes. When a consultant internal audit can provide specialised guidance, organisations benefit from both compliance assurance and actionable insights that strengthen internal controls.

This proactive role is especially important in Saudi Arabia, where regulatory frameworks are becoming more stringent and aligned with international best practices. According to the OECD Corporate Governance Factbook 2025, amendments to the Saudi Corporate Governance Regulations require all listed companies to establish internal audit units, create audit plans, and prepare internal audit reports to ensure compliance and transparency. The factbook noted an increase in sustainability disclosures among Saudi Main Market issuers to 65 percent in 2024, up from 58 percent in 2023, reflecting heightened regulatory reporting and governance expectations.

Regulatory Landscape in Saudi Arabia

Saudi Arabia’s regulatory environment is undergoing significant transformation. Government authorities, including the Capital Market Authority (CMA) and the Saudi Central Bank (SAMA), have introduced new compliance principles and strengthened existing frameworks to promote accountability and risk mitigation.

In April 2025, SAMA introduced thirteen internal auditing and compliance principles requiring clear responsibilities for audit committees, executive management, and boards. These principles emphasise independent audit functions, dynamic risk-based planning, and the need for qualified internal auditors to ensure rigorous oversight.

Moreover, the CMA’s corporate governance amendments now require periodic internal audit reporting and mandatory internal control assessments. These changes aim to align Saudi organisations with global best practices, ensuring robust internal oversight and effective regulatory compliance across sectors including finance, real estate, and publicly traded companies.

Internal Audit as a Pillar of Compliance

Internal audit supports compliance through several key mechanisms:

Risk Identification and Mitigation

One of the primary functions of internal audit is to identify organisational risks that could impact compliance. This includes regulatory, financial, and operational risks. By conducting risk assessments, internal auditors help organisations prioritise controls where the potential for regulatory non-compliance or financial misstatement is greatest. Risk identification also lays the foundation for effective risk management frameworks that satisfy regulatory requirements and industry standards.

Assurance on Controls and Processes

Internal auditors assess the design and operation of internal controls. This process evaluates whether existing controls effectively prevent or detect errors and non-compliance. For example, internal audit reviews may cover areas such as segregation of duties, financial reporting controls, information technology controls, and anti-fraud measures. By providing independent assurance to boards and audit committees, internal audit ensures that compliance objectives remain central to organisational practices.

Encouraging Continuous Monitoring and Reporting

Internal audit fosters ongoing compliance monitoring through continuous auditing techniques and periodic reviews. Internal auditors evaluate whether the organisation has mechanisms to detect compliance violations promptly. For instance, automated tools and data analytics help auditors monitor large volumes of transactions, enabling early detection of control weaknesses and regulatory breaches. This is particularly relevant as companies adopt digital tools to maintain compliance with evolving Saudi standards.

Enhancing Corporate Governance

Internal audit plays a vital role in reinforcing good corporate governance, which is integral to compliance. By providing independent assessments to boards of directors and audit committees, internal auditors contribute to transparent decision-making and accountability. Regulatory reforms in Saudi Arabia now require internal audit units to report directly on their findings and recommendations, reinforcing the connection between audit oversight and governance outcomes.

Support for Strategic Compliance Initiatives

Internal audit often collaborates with compliance teams, external auditors, and regulatory bodies to ensure alignment with statutory requirements. Organisations are increasingly leveraging external expertise from a consultant internal audit to supplement internal capabilities, especially when navigating complex regulatory shifts or implementing new frameworks. Engaging experts can help organisations streamline compliance processes and integrate international standards such as the Global Internal Audit Standards (GIAS), which became effective in January 2025 and unify international audit frameworks to enhance global consistency.

Quantitative Insights: Compliance Trends in Saudi Arabia

Recent data and developments signal a growing emphasis on audit and compliance activities. For example:

  • Saudi Arabia’s internal audit community gathered over five hundred fifty professionals at the 6th Internal Audit Forum in Riyadh in May 2025, underscoring the increasing importance of audit functions in organisational strategy. 

  • National compliance surveys project a year over year increase of 17 percent in compliance-related audit activities by statutory authorities through 2026, highlighting the rising demand for robust audit practices.

  • Companies that invest in structured compliance infrastructure and advisory support complete statutory reporting more than 30 percent faster than those without such programs. 

These data points illustrate that organisations with effective internal audit practices often supported by specialist Financial consultancy Firm advisors are better positioned to meet regulatory expectations, reduce risk exposure, and maintain stakeholder confidence.

Best Practices for Internal Audit to Drive Compliance

To maximise the impact of internal audit efforts and support compliance, organisations should adopt the following best practices:

Establish Clear Audit Charter and Governance Framework

A well-defined internal audit charter outlines the purpose, authority, and responsibilities of the internal audit function. This foundation ensures alignment with regulatory obligations and governance expectations. The charter should specify reporting lines, scope of work, and mechanisms for escalation of regulatory findings.

Integrate Technology and Data Analytics

Modern audit practices increasingly rely on technology. Continuous monitoring tools, data analytics, and artificial intelligence enable internal auditors to review larger data sets efficiently and identify anomalies that indicate non-compliance or emerging risks. Technology integration also supports real-time insights that are crucial for proactive compliance management.

Develop Competent Audit Teams

Internal audit teams should possess a mix of technical expertise, regulatory knowledge, and analytical skills. Organisations may benefit from training programs and certifications to build internal talent. Additionally, engaging specialised consultant internal audit resources can provide targeted expertise in areas such as cybersecurity, financial risk, and regulatory reporting.

Strengthen Collaboration with Compliance and Legal Teams

Internal audit should collaborate closely with compliance, risk management, and legal functions to ensure that audit findings translate into actionable compliance improvements. This multidisciplinary approach promotes a unified response to regulatory changes and reduces duplication of effort across functions.

Regularly Review and Update Audit Methodologies

Regulatory landscapes evolve, and internal audit methodologies must keep pace. Regular updates to audit plans, procedures, and risk assessment frameworks help ensure that audits remain relevant and effective. Organisations should also benchmark their practices against international standards like GIAS to maintain global competitiveness.

Conclusion: Future Ready Compliance Through Internal Audit

Internal audit is a cornerstone of regulatory compliance and organisational resilience in Saudi Arabia’s dynamic regulatory environment. Whether supported by experienced auditors within the organisation or external expertise from a consultant internal audit, effective internal audit functions strengthen risk management, enhance governance, and ensure alignment with statutory reporting obligations. A well-structured internal audit function not only mitigates compliance risks but also drives strategic value that supports sustainable growth.

For organisations seeking to elevate their compliance and audit practice, partnering with a specialised Financial consultancy Firm can provide tailored insight, benchmarking, and execution support that optimises internal controls and governance outcomes. As Saudi Arabia continues to refine its regulatory framework through 2025 and beyond, organisations that prioritise internal audit will be better placed to navigate change, protect stakeholder interests, and achieve long-term success.

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