In the rapidly evolving regulatory and economic landscape of the Kingdom of Saudi Arabia, internal audits have shifted from being optional best practices to mandatory functions within corporate governance structures. Organizations across public and private sectors are now legally required to implement robust internal audit frameworks to ensure accountability, transparency, and operational integrity. Consulting services internal audit plays a crucial role in helping companies design and implement these frameworks according to the latest standards and regulatory expectations, particularly in 2025 where compliance requirements are more stringent than ever before. In an environment where the Financial consultancy Firm you work with can make the difference between compliance success or costly penalties, understanding why internal audits are mandatory becomes a strategic priority.)
According to the OECD Corporate Governance Factbook 2025, amendments to Saudi Arabia’s Corporate Governance Regulations require listed companies to establish internal audit units, adopt audit plans, and prepare internal audit reports. These requirements reflect a broader commitment to strengthening governance, risk management, and internal controls across sectors.
Regulatory Drivers Behind Mandatory Internal Audits
Saudi Corporate Governance Regulations
In January 2024, the Capital Market Authority implemented changes to the Corporate Governance Regulations requiring internal audit appointments, mandatory audit planning, and internal audit reporting. These reforms are part of a larger effort to align Saudi corporate governance with global best practices.
This regulatory shift means that internal audits are no longer optional for groups operating in the Kingdom, particularly for those listed on the Saudi Exchange or operating in regulated industries. Strong internal audit functions help ensure compliance with legal obligations and promote transparency in financial reporting and operational risk management.
Regulatory Updates in 2025
Moreover, the Saudi Central Bank (SAMA) introduced new audit and compliance principles in April 2025, reinforcing governance expectations across banks and finance companies. These principles define competency benchmarks for auditors and require dynamic, data-driven audit planning approved by audit committees.
The Strategic Role of Internal Audit Beyond Compliance
While meeting regulatory requirements is essential, internal audits have evolved into strategic assets that drive performance improvement and risk mitigation. Consulting services internal audit are increasingly sought by Saudi organizations to help interpret regulatory obligations, integrate best practices, and enhance audit quality through data analytics and AI-driven insights.
Supporting Enterprise Risk Management
Internal audits provide objective assurance on the effectiveness of enterprise risk management frameworks. This is especially important in Saudi Arabia’s fast-paced economic environment, where risks ranging from cyber threats to supply chain disruptions can significantly impact business continuity. Internal audits help organizations anticipate and mitigate these risks before they escalate.
Enhancing Governance and Strategic Decision Making
Internal auditors furnish boards and executive leadership with independent insights into governance effectiveness and strategic risks. By moving beyond traditional compliance checks, today’s internal audits evaluate whether organizational strategies align with risk and control frameworks, enabling leadership to make better-informed decisions.
Quantitative Insights for 2025
Adoption and Impact of Internal Audit Practices
Statistics from industry surveys in 2025 reveal that approximately 26 percent of Saudi organizations have yet to integrate IT audits into their internal audit plans, and 44 percent lack in-house IT or cybersecurity expertise within their audit functions. These gaps highlight the growing need for strategic audit planning and external expertise to meet evolving regulatory and risk environments.
Market Expansion and Governance Expectations
By October 2025, the market capitalization of the Tadawul Saudi Stock Exchange reached around 9.66 trillion Saudi riyals, reflecting increased investor scrutiny and heightened expectations for sound corporate governance practices. This expansion underscores the importance of strong internal audit frameworks to maintain investor confidence and facilitate sustainable growth.
Core Benefits of Mandatory Internal Audits
Strengthening Internal Control Systems
One of the primary objectives of internal audits is to enhance internal control mechanisms. Through systematic reviews and evaluations, auditors identify control weaknesses, recommend improvements, and ensure that processes function as intended. This enhances operational efficiency and minimizes the risk of fraud or errors.
Ensuring Compliance with Regulations
Internal audits verify that organizations adhere to applicable laws, regulations, and internal policies. In the Saudi context, this means compliance with the Corporate Governance Regulations, SAMA principles, and industry-specific mandates. Compliance through internal audits reduces the risk of legal penalties and strengthens stakeholder trust.
Improving Operational Performance
Internal audits evaluate operational processes across departments and functions, highlighting inefficiencies and recommending improvements that lead to cost savings and productivity gains. These insights are particularly valuable as Saudi companies embrace digital transformation and global competitiveness.
Challenges Faced in Internal Audit Implementation
Despite the clear benefits, organizations often face hurdles in internal audit implementation. A unified study of internal audit units in government agencies found that many internal audit departments struggle with insufficient professional qualifications, limited training resources, and inadequate integration within organizational structures. Effective consulting services internal audit can help bridge these capability gaps.
Choosing the Right Support: The Role of a Financial Consultancy Firm
Developing a strong internal audit function often requires specialized expertise that goes beyond internal resources. Partnering with a Financial consultancy Firm can provide tailored support to ensure compliance, enhance audit methodologies, and integrate modern audit tools such as advanced data analytics and continuous monitoring systems. In 2025, leading financial consultancy firms are helping Saudi groups adapt to regulatory changes and implement internal audit systems that drive long-term value.
A financial consultancy firm brings experience in international standards, assists with internal audit planning and execution, and supports audit committees in interpreting complex regulatory requirements. This expert guidance ensures that organizations not only meet compliance thresholds but also derive strategic insights from audit activities.
Enhancing Stakeholder Confidence Through Internal Audits
Mandatory internal audits strengthen confidence among investors, regulators, and other stakeholders. Transparent reporting and adherence to governance best practices signal a commitment to integrity and accountability, which is essential for attracting investment and participating in high-profile projects under Vision 2030.
The strategic emphasis on governance excellence means that internal audits have become more than compliance checklists they are essential tools for building trust and supporting sustainable business growth.
Future Outlook for Internal Audit in Saudi Arabia
Looking ahead, Saudi organizations will continue elevating the role of internal audit functions to support strategic goals. The expansion of digital technologies and AI adoption such as AI-powered audit tools introduced at internal audit forums in Riyadh will further enhance audit effectiveness and responsiveness.
With regulatory expectations evolving and a growing emphasis on proactive risk management, internal audits will remain a critical component of corporate governance frameworks across all sectors.
Internal audits are mandatory for Saudi groups today because they underpin compliance with robust regulatory frameworks, enhance organizational governance, and provide strategic value that supports risk management and operational excellence. consulting services internal audit ensures that companies can navigate complex mandates and adopt modern audit practices effectively. Partnering with a Financial consultancy Firm enables organizations to implement internal audit functions that not only meet legal requirements but also drive performance improvement and stakeholder confidence. As the Saudi business environment continues to mature in 2025 and beyond, mandatory internal audits will remain indispensable to sustainable corporate success.
Finance Advisory 