The Financial Services Authority of Seychelles has issued the Code of Corporate Governance, introducing enhanced governance expectations for regulated entities. Among the key developments is the increased emphasis on establishing and maintaining an effective Internal Audit function as part of a sound governance, risk management and internal control framework.
Under Principle 8 of the Code, boards are expected to establish independent and effective internal and external audit procedures to ensure the quality and integrity of corporate reporting. Organisations should now assess whether their governance and assurance arrangements meet the expectations set out in the Code.
Some of the key requirements are outlined below.
Dedicated Internal Audit Function
The Code provides that companies should establish a dedicated Internal Audit function with clearly defined oversight and reporting structures. The Internal Audit function should operate independently and provide the board with objective assurance on the effectiveness of the organisation’s governance, risk management and internal control processes.
Effective Internal Control Framework
Boards are expected to oversee the establishment and maintenance of an effective system of internal control to properly manage the organisation’s risks, assets and capital.
The Code further provides that the Internal Audit framework should be measured against internationally accepted internal audit standards and tested annually to assess its adequacy and effectiveness.
Alternative Assurance Arrangements
Recognising that the establishment of a dedicated Internal Audit function may not be appropriate for every organisation, the Code requires companies that have not established such a function to disclose the reasons for its absence to the Financial Services Authority.
In addition, companies must explain how they obtain adequate assurance that their internal control systems remain effective, including the alternative governance or assurance measures implemented.
Role of the Audit Committee
The Audit Committee plays an important role in supporting the board’s oversight responsibilities. Among its responsibilities is reviewing the effectiveness of the organisation’s risk management framework, system of internal controls and Internal Audit function.
Regular reporting and independent assurance assist the Audit Committee and the board in identifying control weaknesses, monitoring remediation efforts and strengthening the organisation’s overall governance framework.
Preparing for Compliance
Organisations should review their existing governance arrangements to determine whether they satisfy the expectations of the Corporate Governance Code. This may include establishing or enhancing an Internal Audit function, reviewing reporting and oversight structures, documenting alternative assurance arrangements where appropriate, and ensuring that internal control systems are subject to regular independent review.
At FiveComply, we assist organisations in designing, implementing and outsourcing Internal Audit functions that are aligned with internationally recognised standards and tailored to the size, complexity and risk profile of each business. We also support organisations in strengthening their governance and internal control frameworks to meet evolving regulatory expectations.
For further information on how FiveComply can assist your organisation in meeting the Internal Audit requirements under the Seychelles Corporate Governance Code, please contact us.
Disclaimer
For information purposes only. This publication does not constitute legal, regulatory, financial or investment advice.
