After a two year period, during which the guidelines were obligatory and the companies made comprehensive reports regarding the activities of their internal auditors, it was decided to set the aforesaid guidelines under regulations. Some additional disclosure requirements, such as: the way of deciding on remuneration received by the internal auditor, whether the auditing includes company’s activities abroad, did the internal auditor reviewed special transactions carried out during the reporting period (including transactions with a controlling shareholder) were added to new regulations.
Regulations approved by the Knesset stipulate that the board of directors’ report should include the following details regarding the internal auditor:
• Name of the internal editor, the date his tenure commenced, reference to his compliance with requirements stipulated under the law, auditor’s holdings in the company he audits or in its affiliate and whether they might adversely affect his auditing responsibilities, disclosure pertaining to significant
business connections or other significant connections within the audited company or its affiliate and whether they might create a conflict of interest with respect to his position as an auditor;
• Whether the internal auditor is a company’s employee or an outsider, disclosure pertaining to other positions held by him in the company and outside it;
• The way of appointment, date of appointment and reasons for appointment
• The scope of internal auditor’s position, his plan of recompense and its characteristics;
• Definition process of the auditing plan, persons involved in its definition and disclosure regarding whether the internal auditor had examined material transactions carried out during a reporting period(including transactions with controlling shareholders);
• Reference to significant companies held by the main company and their activities abroad, within the auditing plan;
• According to what professional standards was the internal audit prepared by the internal auditor;
• Identity of the auditor’s superior, in the organization;
• Dates on which the findings of the internal auditor were presented to the chairman of the board, the general manager and the chairman of the auditing committee; dates on which discussions were held by the board of directors on the findings presented by the internal editor, and if not held – why;
• Why, under given circumstances, the scope, nature and character of the internal auditor’s working plan are, in the board’s opinion, both sufficient and coherent with the internal audit’s objectives; and whether the internal auditor was given continuous, unimpeded access to the company’s information systems, including its financial data.
• Reasons for terminating the internal auditor’s tenure.
B. Reporting on critical accounting estimates