engleski

Risk Based Internal Auditing

The development and growth of the company, as well as complexity and uncertainty of business environment have influenced on change of internal auditing, with the regard to the emergence of new approaches in defining internal auditing procedures and their application in business organization. In that context, a risk based auditing approach prevails in auditing literature and practice. With this approach, risk assessment becomes a key activity and focus of the internal auditor throughout the whole auditing process, especially in the phase of audit planning. The risk assessment process enables the internal auditor to audit the most important controls and to test those controls in detail because higher risk activities demand higher priority during the auditing process. Therefore, the risk assessment process ensures a selection of the auditing scope and auditing procedures which will be applied in order to maximize the audit efficiency and minimize costs. The risk based internal auditing adds more value to the organization than control based auditing. If the auditor focuses on risk, the audit is more likely to cover wider scope of issues that concern management. Instead of focusing on identification and testing of controls, the internal auditor identifies risks and tests management procedures to mitigate risks.

internal auditing; risk based internal auditing; risk assessment; internal auditing process; internal auditing planning

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