Corporate Governance in the Emirates - A business As Usual I.T. Solution
Added: (Fri Feb 23 2007)
Pressbox (Press Release) -
There is continued speculation from informed sources that Dubai is expected to perfect a corporate governance law within two years in concert with the city-state's emergence as a financial centre, according to the UAE chapter of the Institute of Internal Auditors (IIA).
Public companies in Dubai now have no substantive legal obligation to mirror international standards in internal auditing and corporate governance, but this would certainly change if regulation similar to United States' Sarbanes-Oxley Act is introduced.
Inspired in the fallout of the Enron collapse, the Sarbanes-Oxley Act requires companies to report more information to the public, maintain stronger independence from their auditors and have their financial internal control procedures audited. In short such enterprises have to become more transparent.
This news has been welcomed by Rob Graham, who represents Avanquest in the region. Avanquest is a global solutions provider and includes world class report mining software Monarch in its portfolio. Monarch has around 500,000 users globally in approximately 23,000 organisations. Its many skills include internal auditors to access data in existing static reports without recourse to valuable I.T. time and programming.
Graham states, “The expected new regulations are timely and very much in line with the vision of U.A.E. Vice President and Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum’s intention to perfect a global financial hub here in Dubai”. He continued, “Monarch allows users with average office skills the opportunity to take information contained within existing static reports, merge them - including information from pdf files, and turn such information back into live data for further analysis, summary and distribution. It is a real aid to both internal and external auditors and provides a business as usual approach”.
The signals for change are already being seen. UAE Vice President and Prime Minister and Ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum has issued Decree No. 3 of 2007, which deals with the establishment of Dubai Financial Control Department. The 32-article decree outlines the duties and prerogatives of the new department, which will be annexed to the Ruler's Office.
A director general, who will be appointed by the Ruler, will see to the technical and administrative supervision of the department, draw up its organisational structure and determine the prerogatives of the various administrative units of the department.
The new department will monitor the financial activities of government departments, institutions and companies in which the government holds at least 25% stake of the capital, bodies to which the government provides financial assistance and any other bodies designated by the Ruler or the Chairman of Dubai Executive Council.
The new law, which abrogates Law No. 1 of 1995 (which addressed the establishment of Dubai's Financial Review Department), is effective from January 25, 2007 and will be published in the official gazette.
Other leading players agree that the changes will be useful. "Many listed companies in the UAE adhere to very high standards of corporate governance, but this policy comes from within. As yet, there is no external pressure forcing them to meet certain standards," said T. Raza Abdullah, vice-president, internal audit, Dubai-based Emirates airline.
Adnan Zaidi, Group Director, audit, Dubai Holding, said the IIA's UAE chapter hoped to play a prominent role in shaping the law. "We hope that by raising our awareness and credibility, we will be the first body to be consulted when a draft discussion paper is introduced."
The limited supply of qualified auditors could hold back the UAE's drive to improve standards. The IIA estimates that there are 500 certified auditors practising in the UAE, and this is well below the current level of demand.
"Demand outstrips supply because businesses have realised the value internal auditing can add," said Abdul Rahman Al Hareb, chief of group audit and risk management, Dubai Holding.
The IIA is responding by offering courses and embarking on a recruitment drive in UAE universities. It also aims to change the perception of an auditor's role in a company.
Rogue trader Nick Leeson will be one of the key speakers at the upcoming Gulf Regional Audit Conference in Dubai, organised by the Institute of Internal Auditors (IIA).
The man whose unchecked speculative trading caused the collapse of Barings, the UK’s oldest investment bank, will share his experience on the Singapore International Monetary Exchange.Graham is looking forward to the event and hopes for a meeting with Leeson. “In many ways, he was just a victim of the system, I will be interested to hear his views on how internal auditors could have used Monarch’s many skills to prevent such disasters in organisations happening again”.
In the early 1990s, Leeson’s speculative trades led to large profits, but his luck turned sour and he used a secret account to hide his losses.
When the losses grew, Leeson requested extra funds to continue trading, hoping to some how redeem himself by making more profitable deals. When Barings executives discovered what had happened, they informed the Bank of England that Barings was insolvent. The $1.3 billion of liabilities he had accrued exceeded the entire capital and reserves of the bank. Middle management, using Monarch software would have been able to detect such activity early.
Adnan Zaidi, Group Director, audit, Dubai Holding states, “He’ll talk about what business could have done to stop him and the gaps that management and auditors, be they internal or external, over-looked,” said.
Other speakers will include Sherron Watkins, the vice-president who blew the whistle on the frauds in Enron and was Time magazine’s person of the year in 2002. Watkins is expected to speak about Enron’s spectacular collapse and problems within US corporate culture.
The conference will be held at the Dubai International Convention and Exhibition Centre from March 11 to 13.
Graham has already appointed two Distributors in the region, Total Technologies and Solutions, and CapSoft, as well as a number of Reseller partners. He intends to appoint more and, no doubt, the latest trends will generate many new business partners for Avanquest.
The last word to Graham, “I knew the region was ripe for the launch of our solutions. It is a vital and expanding hub. The predicted changes are timely and we will be proud to help organisations to continue to strive for excellence”.
Rob Graham
Avanquest Middle East
rgraham@avanqueswt.co.uk
971505037755