1. Definitions

No: 46020559

Date(g): 1/10/2024 | Date(h): 28/3/1446

Status: In-Force

For the purpose of applying the provisions of these Principles, the following terms and phrases, wherever mentioned in this document, shall have the meanings assigned to them unless the context otherwise requires.

Term	Definition
SAMA	The Saudi Central Bank.
Principles	The Internal Audit Principles for Finance Companies and Real Estate Refinance Companies.
Law	The Finance Companies Control Law.
Regulations	The Implementing Regulation of the Finance Companies Control Law.
Company	The finance companies and the real estate refinance companies licensed by SAMA.
Board	The Company’s board of directors.
Executive Management	Individuals who run the Company’s daily business, propose and implement strategic decisions, and are considered senior management.
Department	The internal audit department whose director and employees assume internal audit duties and responsibilities in the Company.
Department Director	The person in charge of the internal audit department in the Company.
Internal Auditors	The employees in the Department who are primarily in charge of internal auditing.
Internal Audit Functions	An independent function that provides assurance and objective consulting on the quality, adequacy and effectiveness of the Company’s internal control system. This is achieved by following a systematic and disciplined approach to review the accounting, financial and operational processes, among others, and evaluate and improve the effectiveness of governance, risk management and control processes.
Internal Audit Policy	A formal document prepared by the Department Director and approved by the Board. It contains the items mentioned in Principle 7.
Independance	The freedom from conditions that threaten the ability of the Department to carry out its duties and responsibilities in a professional, objective and unbiased manner.
Objectivity	The unbiased, fact-based professional attitude that allows Internal Auditors to perform their duties in such a manner that they believe in their work product. Additionally, the freedom from material interference or influence from outside the Department or from one’s ideology and personal feelings.
Conflict of Interest	The situation(s) in which the Department Director/Internal Auditor directly or indirectly has an interest or relation in a subject under consideration where they have to make a decision. Such interest or relation may affect the objectivity, independence or impartiality of their decision.
First Line	Business units in charge of identifying, assessing and managing their activity risks in early stages and on an ongoing basis, and take such risks within permissible limits.
Second Line	control and support units, such as risk management, compliance, legal and Sharia (if any), financial and IT departments related to business units that are responsible for comprehensively and systematically ensuring that the business units in the First Line have identified and are effectively managing their business risks.
Third Line	The internal audit department that is responsible for providing independent and objective assurance and advice on the adequacy and effectiveness of governance, risk management, oversight, controls, policies and procedures implemented by the First and Second Lines and boosting confidence in them as well as providing the Audit Committee with reasonable assurance that the policies and procedures are in line with established expectations.
Stakeholders	Anyone who has a direct or indirect interest in the Department, in particular: the Board, Audit Committee, Executive Management, business units, external auditors, external consultants, shareholders, investors and customers.
Laws	The laws that apply to the Company and its employees.
Instructions	All binding regulations, rules, principles, frameworks, guidelines and circulars issued by SAMA, in exercise of its role as a regulatory and supervisory authority, and other competent entities.