By Oh Boon Ping

Numerous Singapore-listed companies have seen their profits dented due to poor controls over inventory and customer collection processes.

And where operations are decentralised or based overseas, this makes an effective internal audit department critical, says risk consulting and internal audit firm Protiviti Singapore.

Internal controls and risk-management practices overseas may not be as high-priority as they are in Singapore, says Protiviti's managing director for internal audit solutions Philip Moulton.

He recommends that listed firms emphasise the importance of risk management and internal controls and make regular visits to foreign subsidiaries to ensure sufficient controls are in place, particularly during these difficult economic times.

'The internal audit should keep regular contact with overseas operations and ensure that business and internal controls are robust to avoid unnecessary losses and detect problems before they escalate,' he says.

Protiviti says a number of Singapore companies put internal audit in the hands of finance personnel, often on a part-time basis. 'This is clearly inappropriate at a time when corporate governance and accountability issues are top of mind for many company directors,' says Mr Moulton.

'In this scenario, the finance personnel are placed in a position where they are highly likely to be reviewing their own work. Thus a key feature of the value proposition of internal audit - independence - is critically compromised.'

Because of these challenges and others, Protiviti has launched a free 44-page guide with practical information on internal audit practices.

The guide seeks to address challenges such as developing strong risk management and internal controls.

In a recent poll of audit committee members at listed companies here, Singapore Management University's School of Accountancy identified these areas as the ones where audit committee members have the greatest need of guidance.

Mr Moulton says of Protiviti's guide: 'Our aim was to provide practical, down to-earth information on internal audit for Singapore-listed companies.

'It's in an easy-to-read FAQ format and addresses many of the common questions we come across with our clients across all levels of executive management and during our meetings with company directors.'

The guide can be downloaded free at www.protiviti.com.sg.

This article was first published in The Business Times on September 19, 2008.