Essential issues in applying risk based internal audit strategy

Author:PhD. Laurenţiu DOBROŢEANU, PhD. Camelia Liliana DOBROŢEANU

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Keywords:risk based auditing, strategy, internal auditing, risk register, audit plan

Abstract:
As an integral part of the corporate governance, internal auditing is increasingly becoming circumscribed to the organizational culture, and plays a considerable role in supporting the organization’s efforts toward achieving its objectives. To this end, the strategies, the vision and the manner of conducting internal audit engagements have continuously evolved in response to challenges triggered by the companies’ changing economic environment. Also, the pressures coming from both management and stakeholders trace the internal audit developments along the time. Therefore, it is not surprisingly at all to find that traditional internal audit strategies, according to which “everything” had to be audited – through so called operational, efficiency or compliance audit engagements – have been gradually replaced by a modern internal audit strategy – risk based auditing (RBA). \r\nIn the content of its professional standards, the Institute of Internal Auditors (IIA) has recognized the pre-eminence of RBA over the traditional ones. Our paper describes the technical details related to RBA approach at commercial companies, paying particular attention to the first two stages of its application. The research methodology employed mainly a wide documentation of relevant studies, along with a critical and comparative analysis of various experiences and opinions related to RBA practices. The large majority of the issues discussed in our paper are new for both the Romanian relevant literature and internal auditing practice. Considering the heavy reliance of the most of domestic companies on traditional strategies of internal auditing – probably, except for the credit institutions – the utility of such an approach in our paper is self-explanatory.

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