Risk-Based Internal Audit Training

In This Training You Will Learn:

  • What risk-based internal auditing is and what its not.
  • The Risk-Based Internal Audit Model – only available in this training.
  • Risk management basics.
  • Step-by-step on how to transform your internal audit activity to a truly risk-based function.
  • How to develop a risk-based internal audit plan.
  • Receive the Certified Risk-Based Internal Auditor professional designation certification
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Why Risk-Based Internal Auditing?

Historically the internal audit profession has focused mainly on accounting and financial controls for areas to audit.  This makes perfect sense.  Most internal auditors have an accounting or finance background.  Many of them have worked as external financial statement auditors or in accounting departments of organizations.  The significant majority have accounting degrees.  Many internal audit activities also report to the Chief Financial Officer.

This focus on internal controls is also completely in line with the what we have been taught about what is wrong with organizations over the last 30 plus years.  Internal auditors have been seen as the group to help make sure organizations stay out of trouble, so it would make sense that they focus on areas where organizations have been in trouble.

In the late 1970‘s and 1980‘s in the wake of foreign corruption scandals and the savings and loan debacle, people started asking questions.  So many questions that the United States Congress established the Treadway Commission to answer the questions of why all of these businesses failing and corruption issues?  The conclusion was – internal controls were lacking.  The 1992 COSO Internal Control Framework was introduced as the answer to our problems.

Fast forward to ethical issues which lead to financial failures in the early 2000‘s.  Major business failures – including the largest bankruptcies in history – again plagued the world.  Those same questions were asked again and the answer again was – we need better internal controls, this time around financial reporting.  The Sarbanes-Oxley Act of 2003 was introduced as the answer to our problems.

Fast forward again to 2008 with the global financial melt-down and recession.  The answer this time was a failure in risk management – the lack of formality and internal controls around risk management.  The increased interest in the last few years in improving risk management processes and the controls around risk management is now seen as the answer.

Focusing only on internal controls will not stop organizations from failing.  It hasn’t so far and it won’t in the future.  The reason is: lack of internal controls is not what causes organizations to fail.  Organization’s fail because they don’t meet their objectives.  They do this by either not making it through or around their obstacles, or find themselves on the outside of the mandatory and voluntary boundaries.

We continue to repeat history because we are not learning from the past.  We are continuing to try to solve a problem with the same solution that doesn’t work.  Businesses fail because they fail to meet their objectives, not because they don’t have internal controls.  The sooner we accept this reality and start auditing organizational objectives, the sooner we can help our organizations avoid failure.

Risk based internal auditing is concerned with helping make sure management has actions and controls in place to meet organizational objectives while they are addressing uncertainty and staying within their boundaries.  This focus will increase the relevance and value of internal auditing and help our organizations meet their objectives.

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About The Book

Internal auditors are told they need to develop a risk-based audit plan, but many internal audit activities simply risk rank their audit universe and believe that is risk-based auditing. Another common mistake is to identify risks to audit without ever determining if they are relevant to the organization’s objectives.

Risk-based internal auditing is really about aligning the annual audit plan, and corresponding audit projects and efforts, with the objectives of the organization. This book takes a unique approach to risk-based auditing by incorporating risk management and internal audit concepts to create a new Risk-Based Internal Audit Framework, while still being consistent with internal auditing standards.

The risk-based internal auditing framework shows how internal audit activities can consider the key objectives of their organizations, the strategies utilized to meet those objectives, and what major threats, and corresponding risks, cause uncertainty about whether the organization can meet those objectives. This is the basis of risk-based internal auditing.

The risk-based internal auditing framework includes eight related components: Understand, Identify, Assess, Plan, Perform, Report, Information & Communication, and Monitor. The main focus of this book is to explain how to approach the Understand, Identify and Assess components of the framework in an innovative way, improving the overall value internal audit can provide to its organization, instead of testing the same internal controls over and over again.

The principles outlined in this book are applicable to all internal audit activities, regardless of geographic location, industry, or type of organization. They can be used in the private or public sector, for profit or non-profit, large or small organizations. The concepts in this book can be used to improve the audit quality in any organization and ensure the internal audit activity is adding value by focusing on helping the organization meet its objectives, not just adding and testing internal controls. It helps the internal audit activity provide much better assurance on what the governance group and management is really concerned about – meeting the organization’s objectives.

This book provides answers and practical how-to information to help internal audit activities take that next step in the evolution of the internal audit profession. It is a must read for any internal auditor.

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