Risk Based Internal Auditing (RBIA)

• An introduction to Risk Based Internal Auditing
• Traditional Approach versus Risk Based internal approach
• Stages of Risk Based Internal Auditing
• Measuring the effectiveness of Risk Based Internal Auditing

• Rationale behind Risk Based Internal Auditing
• Internal Audit – Definitions, Objectives & Scope
• The “Expectations Gap”
• The RISK BASED Internal Audit
• Comparison to the traditional approach

• The meaning of risk
• The attributes of risk – Likelihood & Consequence
• The Risk Heat Map
• Audit risk
• Business risks – classification, internal & external, controllable & non-controllable
• The COSO risk management framework

• COSO — An Integrated Risk Management Framework
• The COSO ERM Framework
• COSO in Finer Detail
• Updates to COSO

• Risk capacity, risk appetite, risk response
• Inherent & residual risk
• Entity risk assessment & Business process risk assessment
• Significant risk
• Risk register

• ERM and the Board of Directors
• What is covered under ERM

• What is risk maturity
• Why it is important
• Risk maturity levels
• Scorecard for assessing risk maturity
• Analyzing the risk maturity results

• Audit is of management of risks and not of risk
• Key reporting areas in the management of risks
• Documenting Board assurance requirements and risk appetite
• Audit strategy & risk maturity
• Selecting individual risks to audit
• Frequency of coverage
• Including the Risks into an Audit Assignment
• Importance of selecting the right auditable unit

• Assessing risk maturity
• Preparing the audit plan
• Conducting the assurance audit
• Reporting to the appropriate level

• Risk assessment steps
• Risk assessment tools
• Risk identification
• Business Activities that are Sources of Risk
• Operational Risk and its categories
• Risk identification methods
• Industry risk models
• Choosing which methods to use
• Typical risk areas
• Risk estimation (Risk measurement/ Risk scoring)
• Risk evaluation
• Risk Heat map & Actions Needed
• Using risk scores

• Market survey
• Dependency modeling
• SWOT analyses
• Event tree analysis
• BPEST (Business, Political, Economical, Social & Technological)
• Fault tree analysis (Root Cause Analysis)
• FEMA (Failure Mode and Effect Analysis)

In this section the instructor will cover the complete Internal Audit Process through with the RBIA methodology is carried out in a consistent manner. This covers the need for the Internal Auditor to become acquainted with the business and the industry allowing him to assess the risk maturity which determines his/her ability to provide the PBIA assurance and to review the risk assessment done by management and the her/his conclusion whether this risk register may be relied upon.

The process covered includes;

• Strategic analysis
• Enterprise risk assessment
• Internal Audit Plan development
• What Risks to Audit – An Alternative Approach
• Internal Audit execution
• The Process Risk Matrix
• Reporting
• Issue Resolution tracking

This is an illustrative case study showing how the RBIA methodology is applied in a real world environment.

Operational risks not discovered can have devastating consequences, including loss of life and irreparable reputational damages. Such was the case of Comair Flight 519.

The speaker will compare RBIA methodology to the regular audit methodology. These methodologies will be examine in terms of;

• Managing risk
• Setting responsibility for risk management, and
• Usefulness to the Board of Directors

The speaker will examine and discuss examples of the RBIA documentation form the case study including;

• Risk Register,
• Audit Procedures and
• Transaction Files.

The instructor will examine and discuss some of the pitfalls that the Internal Auditor may face in his/her assignment and some potential solutions.