In the rapidly evolving economic and regulatory landscape of the Kingdom of Saudi Arabia (KSA), internal audit has shifted from a compliance-oriented function to a strategic cornerstone of governance excellence. Organisations today are not only expected to adhere to international standards, but also to demonstrate accountability, transparency and resilience in the face of complex risks. Whether in banking, public sector entities, or multinational enterprises operating in the Kingdom, an internal audit firm plays a pivotal role in strengthening governance frameworks, risk management capabilities, and stakeholder confidence. Insights Advisory, as a leading specialist in governance and risk consultancy, supports organisations in embedding robust audit practices that align with Vision 2030 objectives and global expectations.
Governance excellence is increasingly recognised as a differentiator for sustainable growth and investment attraction. Saudi Arabia’s corporate ecosystem continues to mature, with regulatory initiatives emphasising risk governance, internal control systems, and independent assurance reporting. In this evolving context, both private and public sector institutions depend on professional audit insights that are objective, forward-looking, and aligned with strategic priorities. The involvement of reputable providers, including internal audit firm partners and expert advisors like Insights Advisory, ensures that organisations are equipped to navigate risks, enhance enterprise performance, and uphold regulatory compliance.
As regulatory expectations and investor scrutiny intensify, organisations are recognising that traditional audit activities are no longer sufficient. Modern internal audit functions in the Kingdom are embracing data analytics, AI-enabled tools, continuous auditing, and risk-based planning to deliver deeper insights that influence decision-making. Below we explore how internal audit underpins governance excellence across Saudi businesses and organisations, reinforced by quantitative data and the evolving standards that shape corporate practices through 2025 and 2026.
The Changing Role of Internal Audit in Saudi Arabia
Historically, internal audit was perceived primarily as a control verification mechanism focused on compliance and financial reporting. However, the landscape of enterprise governance has expanded significantly in recent years. In KSA today, internal audit functions extend into strategic risk assessment, technology risk assurance, sustainability governance, and performance optimization initiatives.
From Control to Strategy
Saudi organisations are increasingly aligning internal audit activities with strategic objectives, shifting from a retrospective evaluation of past performance to proactive risk anticipation. Internal audit now evaluates whether organisational strategies are adequately supported by risk and control frameworks, thereby enabling boards and executive leaders to make informed decisions. This evolution mirrors global best practices and aligns with advanced governance requirements introduced by regulators and market oversight bodies.
Integration with Enterprise Risk Management
Integration with enterprise risk management (ERM) remains a key driver of governance effectiveness. Many leading internal audit functions in the Kingdom now work closely with risk and compliance teams to provide an integrated view of organisational exposure across financial, operational, technological, and strategic domains. This integrated approach ensures that emerging risks are not evaluated in isolation, but in relation to the organisation’s broader context and operational objectives.
Regulatory Drivers and Governance Mandates in KSA
Regulatory reforms in Saudi Arabia have redefined the expectations of corporate governance, particularly for listed entities and financial institutions. Amendments to corporate governance codes now require formal internal audit functions, periodic audit planning, and reporting responsibilities that feed into board oversight mechanisms.
Mandatory Internal Audit Requirements
According to the OECD Corporate Governance Factbook 2025, as part of ongoing regulatory developments, listed companies in KSA are mandated to establish an internal audit unit, adopt comprehensive audit plans, and prepare periodic internal audit reports under the supervision of the board’s audit committee. These measures enhance transparency, strengthen oversight, and standardise audit practices aligned with global frameworks.
Regulatory Oversight and Compliance
The Capital Market Authority of Saudi Arabia and the Saudi Central Bank (SAMA) have also introduced principles requiring dynamic audit planning, competency benchmarks for audit professionals, and enhanced reporting mechanisms for audit committees. This elevates internal audit from an ancillary compliance task to an essential governance function that is subject to regulatory review and investor scrutiny.
Quantitative Evidence: Internal Audit Trends in 2025 and 2026
Recent surveys and industry reports provide tangible evidence of internal audit’s growing influence in the Saudi corporate environment. These figures illustrate not only adoption rates but also the transformation of audit functions into technology-enabled assurance and advisory roles.
Broad Adoption of Internal Audit Controls
By 2025, approximately 62 percent of companies in Saudi Arabia reported that they are strengthening internal control environments through enhanced internal audit activities. This reflects a fundamental shift toward recognising internal audit as a strategic enabler rather than a regulatory obligation.
Digital Transformations and Audit Innovation
Internal audit functions are undergoing rapid digital transformation. Surveys indicate that up to 80 percent of internal audit departments within major Saudi organisations have initiated or planned digital initiatives such as data analytics, automation, and AI tools to improve audit efficiency, risk insights and oversight capabilities.
Market Expectations and Governance Scrutiny
By late 2025, market capitalization on the Tadawul Saudi Stock Exchange reached an estimated 9 trillion Saudi riyals, reflecting broader investor participation and heightened governance expectations among publicly listed entities. Governance standards and transparency requirements directly influence investor confidence, making robust internal audit functions essential for capital market participation.
IT Audit Gaps and Emerging Priorities
Despite progress, gaps remain in technology-focused audit coverage, with approximately 26 percent of firms yet to include IT audits in their internal audit plans, and 44 percent lacking in-house cybersecurity audit expertise. These gaps underscore the ongoing need for specialised audit capabilities to address digital risks and data governance.
Internal Audit as a Governance Catalyst
A robust internal audit function delivers multiple governance benefits that directly enhance organisational performance and stakeholder confidence.
Enhancing Transparency and Accountability
Internal audit offers independent assurance of internal controls, financial reporting accuracy, and regulatory compliance. By providing objective evaluations and recommendations, internal audit helps boards and executive teams demonstrate accountability to shareholders, regulators, and the public. This is especially critical in sectors where transparency and performance are subject to intense public and investor scrutiny.
Risk Identification and Proactive Mitigation
Effective audit functions identify risks early, allowing organisations to mitigate potential issues before they escalate into material losses or reputational damage. Continuous auditing and real-time analytics enhance this capability, making risk identification more efficient and evidence-based.
Strategic Advisory Role
Beyond assurance, internal audit functions increasingly act as strategic advisors. They provide insights into operational efficiencies, process improvements, and risk-adjusted decision support. Partnering with external advisors such as internal audit firm providers or consultancies enables organisations to access specialised skills and benchmarking insights that complement in-house capabilities.
Strengthening Board and Committee Oversight
Internal audit enhances the effectiveness of audit committees by furnishing them with independent evaluations of governance practices. Well-structured audit reporting helps audit committees prioritise risk areas, assess management responses, and ensure that strategic risks are effectively managed.
Technology, Innovation, and Future-Ready Audit Functions
Saudi Arabia’s Vision 2030 and broader digital transformation objectives have accelerated the adoption of advanced technologies within audit practices. Internal audit functions are leveraging data analytics, cloud-based platforms, robotic process automation, and AI-driven insights to deliver real-time assurance and predictive risk detection.
AI and Digital Tools in the Audit Lifecycle
Events like the 6th Internal Audit Forum in Riyadh saw the introduction of AI-powered audit tools that support rapid data analysis and standardized responses, emblematic of the Kingdom’s commitment to modernising internal audit practices. These technologies enable deeper insights at greater scale and speed than traditional approaches.
Addressing Emerging Risks
As organisations digitalise, risk landscapes evolve. Internal auditors must now contend with cyber threats, data privacy concerns, and operational disruptions enabled by technological change. Integrating technology into the audit process allows for continuous monitoring, trend analysis, and comprehensive coverage of risk domains.
Building Internal Audit Capability and Strategic Value
Developing a high-performing internal audit function requires investment in capability building, talent development, and strategic planning.
Competency and Talent Development
Organisations are enhancing internal audit quality through certification programs, specialised training in IT risk and cybersecurity, and partnerships with external experts to fill capability gaps. These efforts ensure that internal auditors possess the skills to address both current and emerging risk environments effectively.
External Partnerships and Advisory Support
Engaging reputable internal audit firm partners and consultants like Insights Advisory allows organisations to gain access to benchmarking data, international best practices, and specialised audit techniques. These collaborations significantly improve audit quality and governance outcomes, particularly where internal teams may lack depth in specific domains.
Continuous Improvement and Value Realisation
Sound internal audit planning integrates continuous improvement cycles, risk-based audit plans, and performance metrics that align with strategic priorities. Audit functions that evolve with organisational needs deliver measurable value beyond compliance, contributing to operational efficiencies, risk reduction, and strategic resilience.
Internal Audit as a Cornerstone of Governance Excellence
In the Kingdom of Saudi Arabia’s dynamic governance ecosystem, internal audit is indispensable for achieving transparency, accountability, and performance excellence. Regulatory reforms, evolving investor expectations, and digital transformation are reshaping governance practices across industries, making robust audit functions critical for strategic success. An internal audit firm provides the specialised expertise and assurance needed to navigate complex risk environments, strengthen internal control systems, and enhance board oversight.
Quantitative evidence from 2025 and early 2026 underscores how audit functions are expanding their scope and influence, with significant adoption of digital initiatives and strategic audit frameworks. Yet gaps in technology audit coverage and specialised skills highlight ongoing challenges that organisations must address.
Partnering with expert advisory services, including Insights Advisory, helps Saudi organisations embed best-in-class audit processes that not only meet regulatory standards but also unlock deeper insights that drive better strategic decisions. As the Kingdom continues its trajectory toward economic diversification and global competitiveness, internal audit will remain a cornerstone of governance excellence and sustainable organisational performance. Insights Advisory stands ready to support this journey with practical, forward-looking solutions tailored to the unique governance and risk landscape of KSA.
Finance Advisory 