Internal Audit and Compliance
The Internal Audit Department carried out planned audits in accordance with the agreed schedule and changes required during the year, as approved by the Board Audit Committee to evaluate, objectively and independently, the adequacy and effectiveness of Internal Control Systems. Furthermore, Internal Audit participated in some special assignments, including, for instance, reviews of compliance with company’s policies with the Compliance Team.
SABIC’s Internal Audit Department reports functionally to Board Audit Committee and administratively to Vice Chairman/Chief Executive Officer. In carrying out its duties, the Department has full access to SABIC’s sites around the world, and information, documents and employee-related issues. The Internal Audit Department operates in accordance with International Internal Auditing Standards (IIA Standards) as confirmed by External Quality Assurance & Improvement assessment. Furthermore, Internal Audit maintains an internal quality assurance and improvement program, covering all aspects of the internal audit activities, to evaluate and continuously improve these activities.
- Throughout 2019, Internal Audit Department regularly issued audit progress reports to the Board Audit Committee during the year covering the audit plan progress, audit activities / observations, progress on internal audits’ outcome and overall update / view on internal controls’ effectiveness and related subjects. During 2019, the Internal Audit continued its significant progress made in closing and verifying audit findings along with strengthening the follow-up / closure process.
- The Internal Audit Department continued to pursue the IA Strategy in 2019, with impactful outcome. The four strategic pillars of the IA Department are Audit Functional Excellence, Stronger 3-Lines of Assurance, Broader Technology / Data Analytics; and Talents Focus, which enabled conducting deeper, smarter and faster audits with tangible influence on Governance, Internal Controls & Risk Management across SABIC’s Corporate Functions and Regions. The Department is committed to continuous improvement through the role of dedicated Audit Expertise Center.
- The Internal Audit Department’s focus on human capabilities remains its top priority; attracting and developing talents and equipping them with required skills and qualifications to perform the audit activities effectively. In 2019, pronounced progress was made in the area of IIA Certifications, whereby a number of auditors added more certifications through a structured preparation program with technical coaching by SABIC IA experts.
- Promoting the 3 Lines of Assurance (3 LOA) model across the company, the IA Leadership team initiated structured engagement sessions with the Company Leadership teams proactively sharing key risks and highlighting internal control themes to watch for and enhance.
- The Certified External Auditor, Ernst & Young, was assigned to audit the accounts of the company for 2019 in addition to reviewing the Internal Control System within the scope of its review of the final financial statements of the company. SABIC Internal Audit kept an active collaboration with the External Auditor, in line with the recognized audit standards, to help fulfilling both missions and adding greater value to the organization.
AUDIT COMMITTEE OPINION
As on 31 December 2019, and based on the Executive Management reports and the content of the external and internal auditors’ reports issued during the year, in our opinion, the Company’s Executive Management has maintained an effective internal control system; and the scope and extent of the audit processes in conjunction with the Audit Committee meeting discussions, have provided reasonable ground for the Committee to formulate this opinion.
SABIC’s Compliance Program establishes a framework to ensure that all our employees act with integrity and comply fully with the laws and regulations of the countries in which we operate, and also adhere to the company’s internal policies that often exceed legal requirements. The SABIC Code of Ethics is the tool that governs how all employees interact with business partners, officials, colleagues and the community. The Code can be found at www.sabic.com/en/about/ sabic-code-of-ethics.
Our approach to ethical behavior focuses on adherence to the company’s governance structures, policies and procedures in the most transparent way possible. Senior executives and leaders are keen to serve as role models for other employees in terms of compliance and ethical conduct.
SABIC’s commitment to integrity and compliance goes far beyond simply seeking to prevent the consequences associated with violations, such as penalties and fines. We believe that ethical commitment to business performance is the foundation of the company’s long-term success.
To build the right foundation for ethical compliance and avoiding violations, all employees are required to attend comprehensive compliance training, refresher courses, and special lessons on specific topics based on work duties, such as antitrust legislation, fair employment practices or trade control systems. This training takes various forms, including face-to-face or online training, and the training materials and formats are updated regularly.
SABIC’s Chief Compliance Counsel is responsible for managing the implementation of the compliance program, supported by a team of compliance lawyers and professionals working in each region where we conduct our business. The Chief Compliance Counsel regularly reports to the Audit Committee of the Board on progress at the program level as well as on any significant results.
We encourage employees to report any compliance concerns, and we encourage them to enquire and ask for guidance if there is any doubt. Employees can report to their manager, communicate with global compliance support lines, or through a web-based reporting tool, which provides the option to report concerns, anonymously. All credible reports are processed and investigated as needed, and all questions are responded to and answered in a timely manner.
At SABIC, we have been a key contributor to the global business fight against corruption since 2012 with our founding membership of the Business 20 (B20) Anti-Corruption Task Force, as well as our active participation in the World Economic Forum’s Partnering Against Corruption Initiative. We are routinely asked to speak and lead on these issues at some of the world’s preeminent anticorruption events.
We continued this activity in 2019 when SABIC hosted a major compliance conference in Riyadh, joined by business and industry leaders. Under the theme ‘Promoting Integrity and Transparency for Growth’, the event provided the Saudi and global business community members in attendance a unique opportunity to connect in the interest of inspiring corporate integrity and compliance practices. More than 400 participants from international and local corporations, government, academia and NGOs joined together to advance governance and compliance practices that can secure business opportunities and investment.
By adding our voice to international anti-corruption efforts, SABIC is finding ways for business to work with other actors to build effective governance institutions, share best practices and technical advice, and ultimately, to improve the human rights of people living in the communities where we operate.
SABIC was also awarded the prestigious Compliance Leader Verification status by Ethisphere Institute, a global leader in defining and advancing standards of ethical business practices. The recognition follows Ethisphere’s comprehensive independent review, evaluation, and validation of SABIC’s Ethics and Compliance program. This permits SABIC to display the Ethisphere Compliance Leader Verification logo as a recognition of the excellence of SABIC’s Ethics and Compliance program and its work in building a Culture of Integrity.