Corporate governance in the Kingdom of Saudi Arabia (KSA) has taken center stage as the nation accelerates economic reform under Vision 2030. In this evolving landscape, internal audit functions are increasingly vital to underpin transparency, accountability, and ethical performance in both private and public sectors. Internal audit consulting services contribute significantly to this transformation by guiding organisations through complex regulatory frameworks, enhancing control systems, and enabling boards to make informed decisions. For businesses seeking deep insight and assurance, partnering with a reputable Financial consultancy Firm ensures that governance structures are aligned with international practices and local expectations. With the Tadawul (Saudi Stock Exchange) market capitalisation rising to approximately 9.66 trillion Saudi riyals by October 2025, strong governance has never been more central to investor confidence and sustainable growth.
A robust internal audit framework is no longer a luxury or optional risk management practice; it is mandated by updated corporate governance regulations and expected by stakeholders worldwide. The effectiveness of internal audit functions directly influences organisational resilience, compliance, and reputation, especially in a rapidly transforming economy such as KSA’s.
Understanding Corporate Governance in Saudi Arabia
Corporate governance refers to the system of rules, practices, and processes by which companies are directed and controlled. Beyond legal compliance, effective governance ensures fair treatment of stakeholders, responsible leadership, transparent reporting, and ethical conduct. In Saudi Arabia, regulatory bodies such as the Capital Market Authority (CMA) and Saudi Exchange have tightened obligations around governance to align with global standards.
Reforms in 2024 mandated the establishment of internal audit units, formulation of audit plans, and preparation of formal internal audit reports for listed companies. These measures significantly enhance organisational discipline, enabling boards and executive leadership to reinforce compliance and strategic alignment across all functions.
The Rising Importance of Internal Audit in Governance
The internal audit function acts as a cornerstone of corporate governance in KSA. Its independent and objective assurance services provide stakeholders with confidence that organisational processes are working effectively and ethically. With evolving business risks such as cybersecurity threats, digital transformation pressures, and investor expectations internal audits offer insights that extend beyond traditional compliance to drive performance improvements and risk mitigation.
By leveraging internal audit consulting services, organisations can enhance their internal controls, ensure better strategic risk coverage, and align audit activities with business objectives. These services help organisations build audit functions that are proactive, forward‑looking, and aligned with international frameworks such as those from the Institute of Internal Auditors (IIA).
Regulatory Framework and Mandatory Internal Audit Functions
In recent years, the CMA has enacted governance reforms that directly impact internal audit practices. Notable changes include enhanced oversight of audit resources, mandatory training for boards on governance matters, and the formalisation of internal audit units within organisations.
From January 2024, listed companies in Saudi Arabia have been required to comply with Articles of the Corporate Governance Regulations that focus on internal audit responsibilities. These include the appointment of qualified internal auditors and the execution of comprehensive audit plans reported to audit committees.
Mandatory internal audits ensure that organisations proactively manage risks, maintain reliable financial reporting, and identify control weaknesses before they escalate into costly failures. This shift reflects a broader mission to protect investors and enhance the Kingdom’s attractiveness to global capital.
Quantitative Insights: Internal Audit and Governance Trends in 2025
Recent surveys and industry data provide a clear snapshot of how internal audit functions are evolving across Saudi companies:
- Approximately 26 percent of organisations do not include IT audits in their internal audit plans, signalling a gap in technology risk coverage.
- Around 44 percent of businesses lack in‑house IT or cybersecurity expertise within their internal audit teams, underscoring the need for specialised consulting support.
- Companies with formal risk identification and review processes that involve senior management account for about 63 percent of organisations surveyed, reflecting growing institutional governance maturity.
- Sustainability reporting disclosures among top issuers on the Saudi Exchange increased from 58 percent in 2023 to 65 percent in 2024, indicating better governance reporting practices overall.
- These figures highlight both progress and opportunities for further strengthening internal audit frameworks across the Kingdom.
Key Roles Internal Audit Plays in Corporate Governance
1. Enhancing Accountability and Transparency
Internal auditors provide independent assessments of governance controls, helping management and boards understand where weaknesses exist and how they can be remediated. Their objective reporting bridges information gaps, thereby increasing transparency for regulators, investors, and stakeholders.
2. Reinforcing Risk Management
Through systematic risk evaluation and control testing, internal audit functions help organisations identify emerging risks, including operational, financial, and strategic threats. Regulators and boards increasingly rely on audit findings to prioritise risk responses and safeguard assets.
3. Ensuring Regulatory Compliance
Internal audit teams ensure that organisations comply with applicable laws, corporate governance regulations, and internal policies. In KSA, compliance is reinforced through both CMA guidelines and mandatory audit reporting requirements.
4. Driving Operational Efficiency and Performance
Beyond compliance, internal audits help businesses eliminate inefficiencies, streamline processes, and promote better use of resources. Regular audit reviews uncover areas of improvement that influence operational productivity and competitiveness.
5. Strengthening Board and Committee Oversight
Audit committees play a crucial role by setting expectations for internal audit functions and monitoring their performance. Effective collaboration between internal auditors and audit committees ensures that governance practices remain robust and responsive to organisational needs.
Internal Audit Consulting Services: Adding Strategic Value
While many organisations maintain internal audit teams, the complexity of today’s corporate governance expectations often requires specialised support. Internal audit consulting services help businesses design and implement dynamic audit frameworks, integrate digital audit tools, and adopt risk‑based auditing approaches.
Consulting experts bring international best practices to local contexts, support capability building inside audit functions, and enhance the quality of audit reporting. For many organisations, partnering with specialists also accelerates compliance with evolving regulatory standards and drives continuous improvement.
The Strategic Impact of Internal Audit on Saudi Organisations
The influence of internal audit extends beyond traditional compliance boundaries to become a strategic enabler. Effective functions contribute to:
- Improved decision‑making: Objective audit insights inform boards and executives, enabling data‑driven strategies.
- Investor confidence: Transparent and reliable reporting strengthens market trust and supports capital‑raising efforts.
- Sustainable growth: Risk mitigation and control enhancements support long‑term organisational resilience.
With regulators and stakeholders expecting deeper oversight and assurance, internal audit helps organisations navigate complexity and steer towards consistent performance excellence.
Future Outlook and the Role of Financial Consultancy Firms
Internal audit in Saudi Arabia is poised for continued evolution, especially as technology, digital risk, and governance expectations rise in sophistication. Organisations that invest in robust internal audit functions will be better equipped to manage risks, attract investment, and sustain stakeholder trust.
For many firms, engaging a Financial consultancy Firm can accelerate this journey by providing specialised expertise in audit transformation, governance frameworks, and compliance assurance. As corporate governance practices continue to evolve through 2025 and into 2026, the role of internal audit remains central to organisational integrity and performance excellence.
Corporate governance in the Kingdom of Saudi Arabia is strengthening across sectors, driven in large part by the enhanced role of internal audit functions. With mandatory regulations, growing investor expectations, and complex risk landscapes, internal audit stands as a strategic pillar of good governance. Organisations that embrace professional internal audit consulting services, supported by a trusted Financial consultancy Firm, are best positioned to enhance transparency, mitigate risks, and achieve operational excellence.
Through continuous improvement and strategic alignment, internal audit contributes not only to compliance but also to long‑term organisational resilience and sustainable growth across the Kingdom.
Finance Advisory 