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 special assignments and conducted consulting services, including, for instance, reviews of compliance with the company’s policies and with the Compliance team.
SABIC’s Internal Audit Department reports functionally to Board Audit Committee and administratively to the Vice Chairman/Chief Executive Officer. In carrying out its duties, the Department has full access to SABIC’s sites around the world, 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 2021, 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 2021, 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 2021, with impactful outcomes. 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.
- In strengthening the 3-Lines of Assurance, the IA Leadership team continued the structured engagement sessions with the company leadership teams, proactively sharing key risks and enhancing internal controls.
- The Internal Audit Department’s focus on advancing its capabilities through technology/ data analytics remains a top priority. In 2021, significant improvements were made toward automating key audit processes and continuously auditing and monitoring the company's critical processes.
- The Internal Audit Department’s focus on human capabilities remains a top priority; attracting and developing talents and equipping them with required skills and qualifications to perform the audit activities in an effective manner. In 2021, pronounced progress was made in the hiring of new talents and the introduction of the Audit Capability Program – a rotation program for high-caliber employees to be seconded into SABIC Internal Audit
- The Certified External Auditor, Ernst & Young was assigned to audit the accounts of the company for 2021 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 fulfil both missions and add greater value to the organization.
The Committee is of the opinion that the Company’s Executive Management has maintained an effective internal control system capable of providing reasonable assurances; and that the audits outcome together with the Audit Committee meeting discussions, have all provided reasonable grounds for formulating this opinion.
At SABIC, compliance is an ongoing process that seeks to engage our workforce, customers, suppliers, investors, community members and other stakeholders with a framework for conducting business in an ethical manner, addressing risk and mitigating issues and concerns.
Starting with our Code of Ethics, we lay out the foundation for our employees to 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. Our leaders embrace the Code and incorporate it into the daily activities of their teams.
To build the right foundation for ethical compliance and avoiding violations, all employees are required to attend comprehensive compliance training, refresher courses, and special training on specific topics based on work duties, such as antitrust legislation, fair employment practices and trade controls. This training takes various forms, including face-to-face or online training, with training materials and formats being updated regularly.
SABIC's Chief Compliance Counsel is responsible for managing the implementation of the compliance program, supported by a team of 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, risks, as well as on any significant results. We encourage employees to report any compliance concerns, and we encourage them to inquire and ask for guidance if there is any doubt.
In order to stay abreast of the latest regulatory developments, to have a broader perspective, to learn best practices and in some cases, to act collectively to impact change, we partner with external organizations that lead on important compliance issues. Since 2013, SABIC has participated in the annual G20/ B20 policy process on anti-corruption. In 2021, we were part of the Italian B20 Integrity and Compliance Task Force. In the Middle East, we are part of an organization called the Pearl Initiative - a group for Gulf-based companies to share best practices on compliance and good governance. Through these partnerships, we learn about pioneering efforts that other companies are taking and we also have the opportunity to share our learnings with others.
Building compliance capacity in our business environment is important to our customers, suppliers and other third parties. They are not satisfied with just knowing what SABIC is doing internally, but want to have visibility over the entire supply chain and know that these are free of corruption, forced and child labor, environmental violations and other elements. In 2021, SABIC launched comprehensive compliance training program for 3rd party business partners including suppliers, distributors and contract workers. Through this online, local-language training, we are able to ensure that our third parties have a grounding in the compliance concepts that we adhere to.
All of these internal and external efforts benefit us in many ways, including through independent recognition. SABIC was awarded the Ethisphere Compliance Leader Verification®, valid through 2022. The Compliance Leader Verification process takes a deep dive view of all aspects of a company’s program, including its ethics and compliance program structure and oversight, training and communication, risk measurement, monitoring for misconduct, disciplinary measures and ethical corporate culture and employee perceptions. The rigorous review process and verification signals to SABIC and our stakeholders that our compliance efforts are recognized.
We were also awarded a Platinum EcoVadis Medal. This result placed SABIC among the top 1 percent of companies assessed by EcoVadis, the world’s largest provider of sustainability ratings. Notably, SABIC scored a 90 out of 100 for its Ethics program.