All organizations face risks, but not all risks are equal. Some risks are more serious than others and can have a greater impact on the organization. Internal audit functions must be able to identify and assess the risks facing their organizations so they can plan their audits accordingly. This article provides insights on how internal audit functions can fine-tune their current risk assessment and audit planning processes, and explores how auditors can better understand and audit the emerging and strategic risks facing their organizations using QuickBooks premier hosting.
The new survey report provides insights into how internal audit functions can improve their risk assessment and audit planning processes. Here are some of the best practices internal audits leaders can use to make their risk assessment efforts more effective:
– Make sure you understand the organization's overall risk appetite.
– Conduct a comprehensive review of the organization's business activities and processes.
– Engage with senior management and the Board of Directors to get their perspectives on risks.
– Identify potential risks with the analysis of data
– Develop a robust communication plan to keep everyone informed about the risks facing the organization.
By understanding these risks, auditors will be able to provide valuable insights to management on how to mitigate them. Here are few other methods that will make your audit a success.
Create a more continuous risk assessment process
Out of all the survey respondents, nearly half of them said that they either assess risk on a regular basis or they do an annual risk assessment along with continuous risk assessment. For the respondents who currently assess risk annually or periodically, 56 percent of them expect to move to a more continuous risk process in the next two years. It becomes necessary to make a more continuous plan for assessment of risks.
Address strategic risks
The majority of respondents said that their risk assessment process formally assesses the strategic risks of the organization. In addition, 70 percent are confident that their internal audit staff would either identify changes in the organization’s strategic risk profile or be informed of such changes in a timely manner.
Watch out for emerging risks
As more companies focus on emerging risks, respondents say they have a formal process in place to identify, assess, and report on these risks. Additionally, companies provide their audit committees with regular reports on internal audit's assessment of emerging risks.
Of those who do not currently include emerging risks in their assessments, 62 percent plan to do so within the next two years. This shows that awareness of emerging risks is growing and that more companies are taking steps to address them.
More attention to cyber security
According to data from the Institute of Internal Auditors' Common Body of Knowledge study, cyber security is the greatest technology-related risk facing internal auditors today. As a result, most internal audit groups are changing their risk assessment processes to enhance their coverage of cyber-risks, and opting for a secure method for auditing with QuickBooks premier cloud hosting.
Address audit committee expectations
It's important for an internal audit group to make sure that its risk assessments and audit planning processes are aligned with the expectations of key stakeholders. Providing overall assurance on the risk management practices of the parent organization is one of the main ways that internal audit can contribute to the success of the company.
In addition, audit committees provide their opinion on the adequacy of the organization’s risk management processes and approximately 75 percent of them inform both the audit committee and management.
Enhance your risk reporting
Internal auditors need to refine their risk assessment processes. While respondents report using Microsoft Word, Excel, or PowerPoint documentation for risk reporting, few are using QuickBooks premier cloud hosting risk-reporting approaches, ranging from heat maps and risk dashboards to combined reporting with an ERM function. By using these new clouds based methods, product managers can more quickly and easily identify risks associated with their projects.
Enhance your risk assessment techniques
Risk assessment techniques are continually evolving and becoming more sophisticated. The survey found that respondents currently use scenario analysis, few use forecasting or other risk modeling, and some perform stress testing against major economic assumptions. Over the next two years, respondents expect to be monitoring key risk indicators, also conducting data or statistical analysis, and assessing the impact of innovative or disruptive technologies.
Impact of macro risk factors
Many respondents said that they are constantly evaluating external macro-risk factors, such as systemic, political, or macro-economic risks. Also, nearly half of those respondents who admitted that their risk assessments do not currently include macro risks said they plan to add that component within a couple of years.
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