Risk Based Auditing - Establishing a Methodology
Author: Lynn Fountain
| CPE Credit: |
2 hours for CPAs |
The Institute of Internal Auditors defines risk based internal auditing (RBIA) as a methodology that links internal auditing to an organization's overall risk management framework. RBIA allows internal audit to provide assurance to the board that risk management processes are managing risks effectively, in relation to the risk appetite.
RBIA is at the cutting edge of internal audit practice. It is an area that is evolving rapidly and where there is still little consensus about the best way to implement it. Executing on true risk based internal auditing requires more than an annual risk assessment for the internal audit plan. It requires a pre-established methodology that includes defining the organization's risk appetite and risk tolerance utilizing measurements that include aspects of financial, compliance and operational metrics. In addition, internal audit must be ready to put aside their typical checklists and standard work programs. True risk based internal auditing goes far beyond setting the annual audit plan. It incorporates cascading the process through to each individual audit as well as the audit reporting process.
Publication Date: October 2024
Topics Covered
- Establishing a RBIA methodology
- Defining the steps
- Understanding risk tolerance, risk appetite, risk measurement
- Applying RBIA questions within each methodology phase
- Utilizing management to develop the RBIA
- is every organization ready for RBIA?
Learning Objectives
- Identify some of the various challenges internal audit may face when attempting to execute upon risk based auditing
- Recognize alternatives to identifying risk appetite and risk tolerance to utilize within risk based auditing
- Identify the development and usage of a variety of risk management characteristics when identifying risk tolerance
- Identify sample scoring techniques to apply to risk based auditing
- Explain how to conclude your assessment for risk based auditing
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Accounting (1 hour), Auditing (1 hour)
Program Prerequisites
None
Advance Preparation
None
