As companies grow and evolve in today’s rapidly changing business environment, they continuously face new sets of risks and challenges. To help executive teams address these changes, internal audit team can no longer afford to employ traditional audits. Internal Audit teams need to be flexible and innovative in their approach by utilizing their resources to focus on the critical areas of the business (e.g. higher risks).
New demands from the board, executive management and regulators, have triggered a shift in focus beyond regulatory compliance issues. In this environment, the industry leaders recognize the need for internal audit to play a larger role in the organization – one that expands on its historic focus on value preservation (control focus) to encompass activities related to value creation (performance focus).
A risk-based audit approach is the latest “best practice” in the evolution of internal auditing, aimed at maximizing the impact of audit by focusing on the major strategic, regulatory, financial and operational risks that confront an organization. This approach targets high risk areas and helps the auditors achieve maximum value for the company from their efforts. It involves challenging existing structures and processes to identify areas for improvement and propose value-adding changes to the organizations.