Address by the Minister of Finance, Mr Constantinos Petrides, at the Cyprus Internal Audit Forum 2021
I am honoured to be with you today, at the 5th Cyprus Annual Internal Audit Forum. The Forum has established itself as the premier annual event for Internal Audit professionals in our country.
The role of internal audit in today’s business world is very important. Internal audit has evolved from an administrative procedure with a focus on compliance, to an important element of good governance. It is in fact considered by many to be one of the key pillars of good governance.
Over the years, and as the Cyprus economy was growing to maturity, the significance and usefulness of the existence and operation of effective internal audit units, operated by well trained and skilled professionals, was realized and accepted by the private sector and by the public sector. The proactive role of internal auditing in its assessment duties has been proven, over and over again, to be one of the most important protective shields in combating fraud and corruption. Moreover, trained, skilled, knowledgeable and experienced internal auditors have demonstrated that they can be competent, knowledgeable and reliable advisors to management and the Board.
There is no doubt that all organisations stand to benefit from having a competent internal audit function and it becomes even more important as they grow in size and develop, as their operations become more complex and mature, as they strive to achieve better performance and higher profitability. By delivering insights on governance, risk and control, internal audit functions provide a challenge to organisational practices and provoke positive change. The role of internal auditing is changing with the changing business environment and the new risks that emerge for all organizations. In recent years, internal audit has a new dynamic role in Fraud Risk Assessment within organizations. The role of managing the risk for fraud can be three-fold. Prevention, by establishing strong and independent Internal Audit Functions and implementing specific protocols, Detection by establishing an adequate and effective system of internal controls, and Investigation by engaging qualified professionals to investigate fraud incidents.
A well-structured internal audit function plays a significant role in the efforts to combat fraudulent activities and corruption. Fraud and corruption go hand in hand and appear in all countries, in all societies and all facets of the economy. This, however, does not provide an excuse to accept them as part of our life. We have an obligation towards our society, and especially towards future generations, to make all the efforts necessary and take all the measures possible today, for their maximum mitigation and ideally their complete extinction. To achieve this target, all people and all state institutions have to adhere to a new culture. A culture where common interest will prevail over personal interest. We must all understand that, by working for, by promoting and by protecting our interests as a society and as a country, we can all benefit as individuals as well.
Even more today, with the pandemic still affecting us with no clear end in sight, along with its associated uncertainty and crisis management requirements, internal audit has found itself in an interesting position to guide organisations through a completely new landscape of risks such as workplace and health transformation business and operational changes, infrastructure flexibility to change, etc.
Internal audit is an increasingly useful and important function not only for private sector organisations but for public sector organisations as well. In the public sector, internal audit function is a fundamental element of a strong governance. As part of its Action Plan against Corruption, the Government decided a few months ago, to set up internal audit units in all Ministries and Deputy Ministries.
Early next year, these newly appointed internal auditors will receive the necessary training in order to enable them to effectively discharge their duties and responsibilities. In addition, the Government has decided that more internal auditors will be employed by the Internal Audit Service of the Republic.
In Cyprus, a European Union member state, we have access to information regarding best practices in all aspects of life; Business activities, Education, Health Care, Public Administration, etc. We also have the manpower, with highly knowledgeable, skilled and trained professionals, to apply these best practices in our country. Once we achieve this, we will bring about a higher standard of living and a better quality of life for all citizens. However, the cooperation and mutual understanding of everybody is a must to accomplish this. The Executive, Legislative and Judiciary Authorities, Local Authorities, Political Parties, Employers’ Institutions, Trade Unions, Independent State Officials, the Press, other organized associations, and the public at large, must all work as one to create the culture we need in order to achieve progress in the whole spectrum of our society.
Undoubtedly, the Covid-19 pandemic has not only influenced our daily lives. It has also applied serious pressures on our economy, forcing the Government to take important remedial measures aiming at the protection of all citizens and of the public health system. These measures contributed the most in the containment of the increase in the level of unemployment, resulting in the 2020 recession being lower than the European Union average. Furthermore, these have brought about the gradual recovery of the Cyprus economy we witness in 2021. A recovery that we are confident will continue in the years to come.
The temporary income support schemes implemented by the Government assisted greatly in keeping unemployment at low levels. This fiscal support to the economy however, unavoidably had a negative effect on public finances but we safeguarded the viability upgrade during pandemic, the Government is targeting to take full advantage of the opportunities offered by the European Union Recovery and Resilience Facility. Additionally, the Government intends to achieve high levels of resilience, productivity and competitiveness of our economy, through the implementation of our new growth strategy.
In this context, at the beginning of this month, we announced our new strategy for attracting businesses and investments. Our vision concerning this new strategy is to establish Cyprus as a successful, reliable and competitive business centre, a European business hub. This new strategy, will be put in force from January 1st 2022, will place particular emphasis on sectors engaging in High Technology, Shipping, Innovation, Research and Development, Biogenetics and Biotechnology. This new strategy will create new employment opportunities for all Cypriots, including internal auditors of course, as well as increased demand for business services that Cyprus has to offer.
Let me conclude by saying that the Cyprus Government takes all necessary measures and makes strong institutional and structural moves to boost higher quality economy for the benefit of our society.
Saying that, I wish you every success to this Conference.
Relevant Press Releases
Turnover Value Index of Services: 3rd quarter 2021
Index of Industrial Output Prices: October 2021
Industrial Production Index: September 2021
Labour Force Survey (LFS): 3rd Quarter 2021
Imports, sales and stocks of petroleum products: October 2021